Category: Retirement

China’s young and old rail against raising retirement age

Mary Pat Campbell

Link: https://asia.nikkei.com/Spotlight/Society/China-s-young-and-old-rail-against-raising-retirement-age

Excerpt:

The retirement age for employees in the public sector and at state-owned enterprises is set at 60 for men, 55 for female office workers and 50 for female blue-collar workers. This has remained unchanged since around the time of the founding of the People’s Republic of China in 1949, even as life expectancy has risen to more than 80 in urban areas.

The government work report presented to the National People’s Congress in March stated that “the statutory retirement age will be raised in a phased manner” as part of the new five-year plan for 2021 through 2025.

Beijing sees this as necessary to alleviate pressure on the social safety net and head off a labor shortage that could set it back in its power struggle with Washington. But resistance is strong from young graduates concerned about the impact on their career prospects as well as from grandparents expected to care for grand children after retirement. 

Author(s): Iori Kawate

Publication Date: 4 April 2021

Publication Site: Nikkei Asia

China to Raise Retirement Age to Offset Funding Shortfall  

Mary Pat Campbell

Link: https://www.voanews.com/east-asia-pacific/voa-news-china/china-raise-retirement-age-offset-funding-shortfall

Excerpt:

 The current statutory retirement age in China is 60 years for male workers, 55 years for female cadres and 50 years for female workers. Cadre is a general term for civil servants working in the government, public institutions and state-owned enterprises. Labor regulations do not differentiate between male cadre and male workers.

Beijing did not specify a target retirement age. By comparison, the current retirement age in the U.S. is 66, although that depends on the year of birth. The global average was 62.7 years for men and 61.3 years for women, according to an analysis of 70 countries by insurer Allianz SE, reported Bloomberg. 

You of MOHRSS said that the retirement age was set in the early 1950s, when people were expected to live about four decades. In 2019, life expectancy in China was 77.3 years nationwide, with city dwellers expected to keep going past 80 years.

Author(s): Yang Ming

Publication Date: 17 March 2021

Publication Site: Voice of America News

China to raise retirement age in stages – state researcher

Mary Pat Campbell

Link: https://www.pionline.com/economy/china-raise-retirement-age-stages-state-researcher

Excerpt:

China plans to raise retirement ages gradually over a number of years instead of in a drastic one-time change, a government researcher said last week, without providing any detail on when the changes might start.

When the retirement age starts being lifted, it will be by a few months every year, or by a month every few months, according to Jin Weigang, head of the Chinese Academy of Labor and Social Security under the Ministry of Human Resources and Social Security. Mr. Jin didn’t say when the changes would begin, but the current five-year plan calls for “raising the retirement age in a phased manner.”

“People in different age groups will be retiring at different ages,” Mr. Jin said in an interview with the state-run Xinhua News Agency published March 13. “For example, in the first year of the policy’s implementation, female workers who were originally scheduled to retire at 50 will retire one month or a few months after 50.”

Author(s): Bloomberg

Publication Date: 15 March 2021

Publication Site: Pensions & Investments

Bill Reintroduced to Shore Up Social Security, Medicare

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2021/04/15/bill-reintroduced-to-shore-up-social-security-medicare/

Excerpt:

A bipartisan group of lawmakers reintroduced Thursday legislation to shore up the Social Security and Medicare Trust Funds.

The Time to Rescue United States Trusts, or TRUST Act, would establish bipartisan, bicameral commissions to address the long-term solvency of major trust funds.

….

The Congressional Budget Office projects the Highway Trust Fund will be insolvent by 2022, the Medicare Hospital Insurance Trust Fund in 2026, the Social Security retirement fund in 2032, and Social Security Disability Insurance in 2035.

Author(s): Melanie Waddell

Publication Date: 15 April 2021

Publication Site: Think Advisor

Singing River retirees file new lawsuit over failed pension. ‘It’s not fair,’ nurse says

Mary Pat Campbell

Link: https://www.sunherald.com/news/local/counties/jackson-county/article250528304.html

Excerpt:

Singing River Health System retirees are learning to live on lower pensions than they expected as attorneys continue to press for financial damages from companies they believe are responsible.

A new lawsuit has been filed over the 2014 failure of the SRHS retirement plan, which caught hundreds of retirees and employees by surprise. Biloxi attorney Jim Reeves is suing accounting firm KPMG LLC and Transamerica Retirement Solutions on behalf of 272 members of the retirement plan.

Reeves said in a news release that the companies were paid “hundreds of thousands of dollars to help manage and audit the pension plan and to accurately communicate the status of the plan to members.”

Author(s): Anita Lee

Publication Date: 12 April 2021

Publication Site: SunHerald

GPIF treads water as ESG picks up pace

Mary Pat Campbell

Link: https://www.pionline.com/pension-funds/gpif-treads-water-esg-picks-pace

Excerpt:

The world’s largest pension fund had charted a course for sustainable investing, but the Government Pension Investment Fund, Tokyo, is now treading water.

After taking the helm of the world’s biggest pension fund as CIO in 2015, Hiromichi Mizuno sought to turn GPIF into a fund that — as one Harvard Business Review article put it — tried to “change the world” through its approach to environmental, social and governance investing.

However, the $1.63 trillion fund — constrained by stricter legal restraints than its peers — has largely been quiet on impact investing since Mr. Mizuno was succeeded in April 2020 by Eiji Ueda. At the same time, the COVID-19 pandemic has accelerated the global push toward ESG themes and GPIF’s peers around the world have cut fossil-fuel investments and threatened to pull funds from firms that fail to meet ethical standards.

Author(s): Bloomberg

Publication Date: 12 April 2021

Publication Site: Pensions & Investments

Funded Levels of Canadian DB Plans Climb to 20-Year High

Mary Pat Campbell

Link: https://www.ai-cio.com/news/funded-levels-canadian-db-plans-climb-20-year-high/

Excerpt:

Thanks to surging bond prices, Canadian defined benefit (DB) pension plans ended the first quarter of this year at their highest funded levels in more than 20 years, according to Mercer. However, the asset manager and consulting firm warns that the lofty funded positions might not last, depending on the trajectory of interest rates, inflation expectations, and equity market performance.

Mercer’s Pension Health Index, which tracks the solvency ratio of a hypothetical DB pension plan, increased to 124% at the end of March from 114% at the end of 2020. That is the index’s highest level since it was launched in 1999. Meanwhile, the median solvency ratio of the pension plans of Mercer clients was 104% as of the end of March, up from 96% at the end of December.

Long bond yields jumped 77 basis points (bps) during the quarter to lower the plans’ liabilities and more than offset the negative returns reported by many pension funds during the period.

Author(s): Michael Katz

Publication Date: 12 April 2021

Publication Site: ai-CIO

ARPA and Pension Plans: A Closer Look

Mary Pat Campbell

Link: https://www.asppa-net.org/news/arpa-and-pension-plans-closer-look

Excerpt:

Contribution Requirements. Callan expects that higher discount rates and longer periods for shortfall amortization probably will reduce pension plan sponsors’ contribution requirements. Further, they expect that effect to be greatest for plans with smaller normal costs and/or larger funding shortfalls.  
Callan continues that if smoothing is ever fully phased out, they anticipate contribution requirements would increase as discount rates “finally decline from historical highs to match market conditions,” but they also add that the longer amortization period “does provide a permanent reduction in annual cash requirements.”

The changes to the minimum funding requirements, Cheiron says, will result in lower minimum funding requirements. They will not affect segment rates used for other purposes such as calculation of lump sum benefits and the maximum deductible limit. 

Author(s): John Iekel

Publication Date: 29 March 2021

Publication Site: ASPPA

Pension and Executive Compensation Provisions in the American Rescue Plan Act

Mary Pat Campbell

Link: https://www.seyfarth.com/news-insights/pension-and-executive-compensation-provisions-in-the-american-rescue-plan-act.html

Excerpt:

Seyfarth Synopsis: On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (“ARPA”), the $1.9 trillion COVID-19 relief bill.  ARPA includes various forms of multiemployer and single employer pension plan relief, as well as certain executive compensation changes under Section 162(m) of the Internal Revenue Code (“Code”), which are discussed further below. Please see our companion Client Alert on the other employee benefit items of interest in ARPA here.

Author(s): Seong Kim, Christina M. Cerasale, Kaley M. Ventura, Alan B. Cabral

Publication Date: 11 March 2021

Publication Site: Seyfarth

$59 Million Settlement in Pension Plan Outdated Actuarial Assumption Litigation

Mary Pat Campbell

Link: https://www.natlawreview.com/article/59-million-settlement-pension-plan-outdated-actuarial-assumption-litigation

Excerpt:

A dramatic, recent example of this dilemma occurred in a Massachusetts district court proceeding, when an employer agreed to a $59.17 million settlement in a proposed ERISA class action accusing it of using outdated mortality rates to calculate pensions. Cruz v. Raytheon Co., Mass. Dist. case number 1:19-CV-11425-PBS, Feb. 16, 2021.

The employer had argued in its motion to dismiss that the retirees failed to make the case that the plan violated ERISA by unreasonably using a mortality table created in 1971 and a 7% interest rate to calculate retirees’ alternative annuity benefits it said would be “actuarially equivalent” to the plan’s benefits. The employer argued that its conversion factors for determining the alternative annuity benefits were reasonable and that the retirees were attempting to force their own arbitrary actuarial assumptions. The employer further asserted that under ERISA, employers sponsoring pension plans have wide discretion in determining which actuarial assumptions or conversion factors can be used, requiring only that the single life annuity (SLA) normal form of benefit is equivalent by actuarial standards.

Author(s): Jeffrey D. Mamorsky, Richard A. Sirus, Greenberg Traurig, LLP

Publication Date: 16 March 2021

Publication Site: National Law Review

The New Zealand Pension Fund announced a $ 17.5 million bitcoin (BTC) investment in October

Mary Pat Campbell

Link: https://www.1olay.com/2021/03/the-new-zealand-pension-fund-announced.html

Excerpt:

It has emerged that a New Zealand fund manager invested $ 17.5 million worth of Bitcoin in October 2020, when BTC was around $ 10,000. According to James Grigor, the company’s Chief Investment Officer, KiwiSaver Growth Strategy recently invested 5% of its money in Bitcoin.

While several investors from KiwiSaver are unhappy with the decision, Grigor believes Bitcoin has become a commodity similar to gold and has many similar features, such as working as a store of value against Fiat hyperinflation. The official told New Zealand news agency stuff:

Author(s): Tahsin

Publication Date: 28 March 2021

Publication Site: 1olay

SUNY Faculty Urge Pension to Divest from Fossil Fuels

Mary Pat Campbell

Link: https://therivernewsroom.com/suny-faculty-pension-divest-from-fossil-fuels/

Excerpt:

In late February, the State University of New York Cortland Faculty Senate, which represents instructors at the Southern Tier school, unanimously passed a resolution urging its pension fund manager, Teachers Insurance and Annuity Association, to divest from fossil fuel companies. “Whereas, the Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA) has $8 billion invested in industries promoting fossil fuel production, distribution and consumption,” reads the resolution, “…Therefore be it resolved, that the SUNY Cortland faculty urges the SUNY Board of Trustees to support and advocate for the divestment of TIAA funds from all fossil fuel holdings….”

In doing so, the SUNY Cortland Faculty Senate became the latest institution to join TIAA Divest, a campaign demanding that TIAA cease investing in fossil fuel projects, businesses involved in deforestation, and other enterprises accelerating climate change. TIAA has thus far refused to take action, but environmentalists hope that the growing pressure from clients like SUNY faculty will force its hand.

Author(s): Arvind Dilawar

Publication Date: 16 March 2021

Publication Site: The River