Month: October 2021

Arizona IMO Seeks Bankruptcy Protection From IUL Fraud Fight

Mary Pat Campbell

Link:https://insurancenewsnet.com/innarticle/bankrupt-arizona-imo-at-center-of-iul-fraud-fight

Excerpt:

A prolific pension fraud scheme that spread to the insurance industry before being shut down by federal investigators continues to produce fresh lawsuits.

And it also continues to claim new victims — the latest being Shurwest, a successful Scottsdale, Ariz., independent marketing organization. Shurwest filed for Chapter 11 bankruptcy Aug. 31 after executives realized “there’s not going to be anything left,” one of its attorneys said.

According to bankruptcy documents, Shurwest faces 38 pending lawsuits in state and federal courts.

Author(s): John Hilton

Publication Date: 6 Oct 2021

Publication Site: Insurance News Net

An Ohio Pension Manager Risks Running Out of Retirement Money. His Answer: Take More Risks.

Mary Pat Campbell

Link:https://www.wsj.com/articles/an-ohio-pension-manager-risks-running-out-of-retirement-money-his-answer-take-more-risks-11634356831

Graphic:

Excerpt:

Mr. Majeed is the investment chief for an $18 billion Ohio school pension that provides retirement benefits to more than 80,000 retired librarians, bus drivers, cafeteria workers and other former employees. The problem is that this fund pays out more in pension checks every year than its current workers and employers contribute. That gap helps explain why it is billions short of what it needs to cover its future retirement promises.

“The bucket is leaking,” he said.

The solution for Mr. Majeed — as well as other pension managers across the country — is to take on more investment risk. His fund and many other retirement systems are loading up on illiquid assets such as private equity, private loans to companies and real estate.

So-called “alternative” investments now comprise 24% of public pension fund portfolios, according to the most recent data from the Boston College Center for Retirement Research. That is up from 8% in 2001. During that time, the amount invested in more traditional stocks and bonds dropped to 71% from 89%. At Mr. Majeed’s fund, alternatives were 32% of his portfolio at the end of July, compared with 13% in fiscal 2001.

Author(s): Heather Gillers

Publication Date: 16 Oct 2021

Publication Site: WSJ

How Malaria Brought Down Great Empires

Mary Pat Campbell

Link:https://www.wsj.com/articles/how-malaria-brought-down-great-empires-11634320669

Excerpt:

Malaria could stop an army in its tracks. In 413 BC, at the height of the disastrous Sicilian Expedition, malaria sucked the life out of the Athenian army as it lay siege to Syracuse. Athens never recovered from its losses and fell to the Spartans in 404 BC.

But while malaria helped to destroy the Athenians, it provided the Roman Republic with a natural barrier against invaders. The infested Pontine Marshes south of Rome enabled successive generations of Romans to conquer North Africa, the Middle East and Europe with some assurance they wouldn’t lose their own homeland. Thus, the spread of classical civilization was carried on the wings of the mosquito. In the 5th century, though, the blessing became a curse as the disease robbed the Roman Empire of its manpower.

Throughout the medieval era, malaria checked the territorial ambitions of kings and emperors. The greatest beneficiary was Africa, where endemic malaria was deadly to would-be colonizers. The conquistadors suffered no such handicap in the New World.

Author(s): Amanda Foreman

Publication Date: 15 Oct 2021

Publication Site: WSJ

ASPPA 2021 Conference: Day 1

Mary Pat Campbell

Link:https://burypensions.wordpress.com/2021/10/17/asppa-2021-conference-day-1/

Excerpt:

General Session 1: Washington Update

per Brian Graff who has spent 25 years at ASPPA and got some recognition for it at the end of this session.

….

Hispanic and Black coverage in 401(k) plans is low and if this situation it does not improve private sector plans could be eliminated in favor of a government option as in Australia. States (first Oregon, then CA, and 8 others) are setting up their own plans and forcing companies to be in it if they don’t have their own plans. This is good for us in that companies do not want to give their money to states (especially in CA and NJ) so they set up their own plans that need to administered by us.

Proposal that may be effective in 2023 is requiring all companies with at least six employees in the last two years to set up a 401(k) plan with auto-enrollment at 6% going up to 10%. Pie would increase by 62 million participants (from 95 million now) and 600,000 plans (on top of 800,000 now).

Author(s): John Bury

Publication Date: 17 Oct 2021

Publication Site: burypensions

Biden’s Falling Approval Ratings Are Bad News For The Municipal Market

Mary Pat Campbell

Link:https://www.forbes.com/sites/lizfarmer/2021/10/16/bidens-falling-approval-ratings-are-bad-news-for-the-municipal-market/?sh=7c3aed496a80

Excerpt:

Advanced refunding bonds allowed governments to refinance debt earlier, thus letting them take advantage of lower interest rates years sooner and save taxpayer money. The 2017 tax reform eliminated their tax-exempt status which effectively nixed their cost-saving value for governments. But the move increased federal government revenues by billions of dollars each year. Reinstating the bonds, according to a report from the Joint Committee on Taxation (JCT), would cost $11 billion over the next five years.

A federally subsidized taxable bond — what market watchers are calling BABs 2.0 — works differently. Unlike tax-exempt municipal bonds, BABs are taxable, and, as a result, open up the municipal market to new investors, such as pension funds or those living abroad. More buyers is a good thing, but BABs are also more expensive for governments. So to defray the added cost, the federal government in 2009 offered a direct subsidy of 35% of state and local governments’ interest payments on BABs.

That is, until sequestration in 2013 dramatically cut the subsidy and left state and local governments scrambling to fill the void.

BABs 2.0 would work similarly, but also lock in the federal subsidy — a much better deal for governments. They’re expected to cost the federal government more than $22.5 billion between 2022 and 2031, according to estimates from the JCT. 

Author(s): Liz Farmer

Publication Date: 16 Oct 2021

Publication Site: Forbes

COVID-19 Relief Program Tracker (NY)

Mary Pat Campbell

Link:https://www.osc.state.ny.us/reports/covid-relief-program-tracker

Graphic:

Excerpt:

The Office of the State Comptroller has created this dashboard to track federal relief funds received during the pandemic and eight programs that offer targeted assistance to New Yorkers most severely impacted by the COVID-19 pandemic. 

The tracker explains when each funding stream or program was authorized, how it is designed and how much has been received and spent to date. The data will be updated monthly and will be expanded over time as more information becomes available. We hope the information presented here can be used to help New Yorkers understand how federal aid is used and to inform future conversations about budget investments.

Select a relief program to view its funding and spending, or download this month’s data for all programs.

Author(s):Thomas DiNapoli

Publication Date: accessed 17 Oct 2021

Publication Site: Office of the Comptroller of the State of New York

State comptroller launches COVID-19 relief fund tracker

Mary Pat Campbell

Link:https://www.timesunion.com/state/article/DiNapoli-launches-tracker-of-COVID-19-relief-funds-16533107.php?IPID=Times-Union-HP-CP-Latest-News

Excerpt:

The state has received $21 billion in federal pandemic relief money and has spent $6.1 billion since the end of September, according to a new online tracker released by the state comptroller’s office.

Despite less than a third of the money being spent to date, much of the federal cash has a general spending plan ascribed to it. The state has received just over half of its expected federal aid, which is to total $39.8 billion, according to the tracker. 

“Thankfully New York is getting billions of dollars of federal funding that really has been a lifeline,” state Comptroller Thomas P. DiNapoli told the Times Union. “When you’re seeing an infusion of funding at that magnitude, it is important to follow the money and make sure it is spent as intended.”

Author(s): Joshua Solomon

Publication Date: 14 Oct 2021

Publication Site: Times Union

October 17-23, 1921

Mary Pat Campbell

Link:https://roaring20s.substack.com/p/october-17-1921

Graphic:

Excerpt:

The prominent German industrialist Hugo Stinnes suggests a fringe dictatorship might seize power because the poorly drawn up armistice extracts too great a toll on the Teutonic nation. He reckons that one of the infant right wing parties could take power some day. Whatever the case, trouble is brewing.

Author(s): Tate

Publication Date: 17 Oct 2021

Publication Site: Roaring 20s

What’s inside the Treasury’s proposal to track nearly all bank accounts

Mary Pat Campbell

Link:https://www.cbsnews.com/news/treasury-proposal-to-report-bank-information-600/

Excerpt:

The Treasury proposal would have banks report “gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner.” Banks already report interest income over $10 on Form 1099-INT; this proposal would add a few lines to that tax document.

Treasury officials have said that fears of stepped-up audits are unfounded, and the administration has pledged not to increase audits on people earning under $400,000 a year, but focus enforcement “on higher earners who do not fully report their tax liabilities.”

Officials emphasize the IRS would not learn about individual spending patterns — only total money going in or out.

“The proposal involves no reporting of individual transactions of any individual,” Treasury Secretary Janet Yellen told CBS Evening News’ Norah O’Donnell. “If somebody reports an income of $10,000 and they had 3 million [dollars] go out of their checking account, that tells the IRS that’s an individual you might audit.”

Author(s): IRINA IVANOVA

Publication Date: 13 Oct 2021

Publication Site: CBS News

Who’s Missing From The ‘Build Back Better’ Reconciliation Bill? The Elderly And Disabled Poor

Mary Pat Campbell

Link:https://www.forbes.com/sites/ebauer/2021/10/10/whos-missing-from-the-build-back-better-reconciliation-bill-the-elderly-and-disabled-poor/

Excerpt:

In recent articles, I have lamented poorly designed components of the Reconciliation Bill, from a poorly-designed “free childcare” program to a family leave plan that’s designed to be “free” rather than funded by the workers who benefit, to a Medicare drug benefit that’s planned to be implemented at the same time as Part A Medicare is facing insolvency, to a mandate that employers provide retirement plan access that leaves virtually all of the specifics up to a bureaucratic agency. And this just scratches at the surface of the expansive programs on tap if the bill is passed as currently drafted. But there’s one piece of legislation that advocates have been calling for, for years, which didn’t make the cut: an increase in the benefits for the poorest of the poor elderly and disabled who receive Supplemental Security Income, or SSI.

…..

So why didn’t SSI make the cut, when the Democrats compiled their list of programs for the “American Family Plan”? Do some of these changes go too far, increase benefits too much? Did they want to avoid opening up a can of worms with respect to larger plan design issues with the system, for example, concerns that the children’s benefits have become an “alternative welfare system” providing benefits for children equal to those for adults, even with mild conditions such as ADHD, that mean no one wants to touch the system?

Or does an enhancement of SSI benefits simply fail to meet the Democrats’ objective of making voters happy with broad outlays of cash benefitting the middle class as well as the poor?

Author(s): Elizabeth Bauer

Publication Date: 10 Oct 2021

Publication Site: Forbes

5500 – Central States – 2020

Mary Pat Campbell

Link:https://burypensions.wordpress.com/2021/10/15/5500-central-states-2020/

Graphic:

Excerpt:

We had some 5500 history in an earlier blog through 2016. This is where the plan was last year based on their 5500 filing for 2020:

Plan Name: Central States, Southeast & Southwest Areas Pension Plan

EIN/PN: 36-6044243/001

Total participants @ 12/31/20: 364,908 including:

Retirees: 191,550

Separated but entitled to benefits: 121,667

Still working: 51,691

….

Funded ratio: 21.91%

Author(s): John Bury

Publication Date: 15 Oct 2021

Publication Site: Burypensions