Pensions didn’t run with the bulls, so what now?

pension climate

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March 26, 2020 Update: The last 11 years have seen the longest bull run in history. However, the last several years have also seen soaring unfunded liabilities for pensions, especially public pensions. Forbes contributor Edward Siedle noted that during the dotcom boom in the late 1990s and early 2000s, many public pensions increased their benefits because their investments performed very well as the bubble inflated. Of course, the dotcom bubble eventually popped, but those increased benefits continued.

Now that the longest bull run seems to be over, it’s worth noting that many pensions weren’t able to increase their benefits during the market boom. For some reason, funds did not see their investments soar as much as the market did.

He blames mismanagement of investments for the different experience this time around. He also said that about half of all state and local pension funds slashed their benefits since the 2008 financial crisis. The average public pension fund is just 70% funded currently.

Pointing out the struggle these funds had during the bull run leaves a big question unanswered now. If they struggled while the markets were soaring, what will happen to these funds now that the bottom is falling out of the market during the coronavirus pandemic?

Lawmakers convicted of felonies may not collect pensions

March 13, 2020 Update: Sen. Thom Tillis of North Carolina introduced a bill on Thursday to keep lawmakers who have been convicted of felonies from receiving pensions. The bill follows the guilty plea from California Representative Duncan Hunter earlier this year. Media reports indicated that he would probably still receive retirement benefits from his time serving in Congress, including a sizable pension.

Tillis noted that the system is broken because Hunter was able to delay his resignation date so he could qualify for another year of eligibility for his congressional pension. According to The Hill, the bill would apply to lawmakers who either plead guilty to a felony committed while they were in office or are convicted of a felony while in office. The bill would also amend ethics rules to make misusing campaign funds a crime that keeps lawmakers from being eligible to collect their pensions.

Too little, too late for reform in Illinois

Mar. 3, 2020 Update: The need for public pension reform has been apparent for many years. However, real changes that will bring about lasting, sustainable solutions have been elusive. Illinois, which is among the worst-funded systems in the U.S., has been trying to tackle the problem for a while. However, a ratings agency says that what the state plans to do won’t fix its pension problems, disappointing anyone hoping for a solution that could be repeated elsewhere for the nation’s public pension crisis.

Illinois Gov. J.B. Pritzker wants to devote $200 million in new revenue to the state’s pension systems as part of his suggested graduated-rate income tax plan, which …read more

Source:: ValueWalk


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