Tag: Michael Katz

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

Vermont Pension Reform Plan Blasted by State Teachers, Workers

Mary Pat Campbell

Link: https://www.ai-cio.com/news/vermont-pension-reform-plan-blasted-state-teachers-worker/

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Excerpt:

A plan proposed by Vermont lawmakers to bolster the state’s pension systems, which are facing nearly $3 billion in unfunded liabilities, has been resoundingly panned by state teachers and public employees who said they felt abandoned and betrayed.

According to a draft of the pension reform plan released by the state’s House lawmakers, teachers and state employees would be required to pay more in contributions to the fund, stay in the workforce longer, and get less in monthly benefits when they retire. Additionally, cost of living adjustments (COLAs) would apply only to the first $24,000 of the retirement benefit, and to be vested in the program, employees would have to work twice as long—a minimum of 10 years from the current five.

Author(s): Michael Katz

Publication Date: 30 March 2021

Publication Site: ai-CIO

Kentucky Lawmakers Override Pension Bill Veto

Mary Pat Campbell

Link: https://www.ai-cio.com/news/kentucky-lawmakers-override-pension-bill-veto/

Excerpt:

The GOP-run Kentucky state legislature has overridden Democratic Gov. Andy Beshear’s veto of a pension reform bill that will place new teachers in a hybrid pension plan that incorporates aspects of a defined contribution (DC) and a defined benefit (DB) plan.

Under House Bill 258, new teachers are required to contribute more to their retirement plans than current teachers do, and they will have to work for 30 years instead of 27 to earn their maximum benefits. The new rules will become effective at the beginning of 2022.

The bill had been passed by large majority of both chambers of the legislature earlier this year, with the House passing it by a vote of 68 to 28 and the Senate passing it by a count of 63 to 34. Because the state’s Republicans have a supermajority in both the House and Senate, they didn’t have much difficulty in overriding the veto, which was one of 24 vetoes passed down by Beshear, a Democrat, that were overridden in one day.

Author(s): Michael Katz

Publication Date: 1 April 2021

Publication Site: ai-CIO

McAfee Indicted for Fraud, Money Laundering Conspiracy Crimes

Mary Pat Campbell

Link: https://www.ai-cio.com/news/mcafee-indicted-fraud-money-laundering-conspiracy-crimes/

Excerpt:

John McAfee, founder of cybersecurity software company McAfee, has been indicted on multiple charges stemming from two purported schemes relating to the allegedly fraudulent promotion of cryptocurrencies. Jimmy Watson, who served as an executive adviser on McAfee’s “cryptocurrency team,” was also charged in the indictment.

According to the allegations in the complaint, which was unsealed in Manhattan federal court, the first of the two schemes involved a fraudulent practice called “scalping,” also known as a “pump-and-dump” scheme. As part of the alleged scheme, McAfee, Watson, and other associates allegedly bought large quantities of publicly traded cryptocurrency altcoins at low market prices, knowing that McAfee planned to publicly endorse them on his Twitter account, which had approximately 784,000 followers.

Author(s): Michael Katz

Publication Date: 12 March 2021

Publication Site: ai-CIO

Massachusetts Pension Fund Returns 12.6% in 2020, Hits Record Asset Value

Mary Pat Campbell

Link: https://www.ai-cio.com/news/massachusetts-pension-fund-returns-12-6-2020-hits-record-asset-value/

Excerpt:

A strong second half rebound helped the Massachusetts Pension Reserves Investment Trust (PRIT) end calendar year 2020 with a 12.6% return, beating its benchmark’s return of 10.8% and raising the fund to a record high of $86.9 billion in assets, according to Pension Reserves Investment Management (PRIM), which oversees the fund.

The fund also surpassed its benchmark over the past three, five, and 10 years, with annualized returns of 8.8%, 10.4%, and 8.9%, respectively, compared with 8.0%, 9.5%, and 7.6%, respectively for its benchmark over the same time periods.

Author(s): Michael Katz

Publication Date: 9 February 2021

Publication Site: ai-CIO

North Carolina Lowers Assumed Rate of Return for State Pensions to 6.5%

Mary Pat Campbell

Link: https://www.ai-cio.com/news/north-carolina-lowers-assumed-rate-return-state-pensions-6-5/

Excerpt:

The $116 billion North Carolina Retirement Systems has lowered its assumed rate of investment return for the third time in four years, cutting it by 50 basis points (bps) to 6.5% from 7% annually.

The target return had already been reduced to 7.2% from 7.25% in 2017 and again in 2018 to 7%. Prior to then, the rates had been left unchanged for nearly six decades even though the two main state pension funds—the Teachers’ and State Employees’ Retirement System and the Local Government Employees’ Retirement System—have, on average, underperformed their assumed rates of return over the past 20 years. In fact, the new target rate of 6.5% is still higher than the fund’s estimated 20-year return of 6.28%.

Author(s): Michael Katz

Publication Date: 5 February 2021

Publication Site: ai-CIO

Public Pensions Increasingly Rely on Investment Earnings

Mary Pat Campbell

Link: https://www.ai-cio.com/news/public-pensions-increasingly-rely-investment-earnings/

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Excerpt:

Public pension funds derived 71% of their revenue from their investment earnings last year, up from 69% in both 2019 and 2018, according to an annual study from the National Conference on Public Employee Retirement Systems (NCPERS).

Employer and employee contributions made up the rest of the revenue, accounting for 20% and 9%, respectively. The share of revenue from employer contributions declined from 22% in 2019, while the share of revenue from employee contributions remained unchanged.

The study was based on responses from 138 state and local pension systems that have approximately 12.8 million active and retired members, and assets of more than $1.5 trillion in actuarial and market value. Among the responses, 51% were from statewide pension systems, while 49% were from local pension systems.

Author(s): Michael Katz

Publication Date: 5 February 2021

Publication Site: ai-CIO

Wisconsin Treasurer Recommends Creating State-Run Retirement Plan

Mary Pat Campbell

Link: https://www.ai-cio.com/news/wisconsin-treasurer-recommends-creating-state-run-retirement-plan/

Excerpt:

A task force headed by Wisconsin’s state treasurer has recommended that Wisconsin establish a state-run program that provides a retirement benefit plan for employers that don’t offer one.

The task force, which was created by Wisconsin Gov. Tony Evers in 2019, issued a report outlining the causes of the state’s “retirement security crisis” and provided several recommendations it said would strengthen the financial security of Wisconsin’s retirees.

“Wisconsin is in trouble when it comes to retirement security,” the task force’s report began ominously. “Even before the COVID-19 pandemic, our retirement system was not working for a significant number of Wisconsin workers.”

Author(s): Michael Katz

Publication Date: 24 February 2021

Publication Site: ai-CIO

OMERS Reports First Annual Loss Since Financial Crisis

Mary Pat Campbell

Link: https://www.ai-cio.com/news/omers-reports-first-annual-loss-since-financial-crisis/

Excerpt:

Canada’s Ontario Municipal Employees Retirement System (OMERS) reported a 2.7% loss last year, well off its benchmark’s return of 6.9%. It’s the first time the pension fund has seen a loss since the financial crisis of 2008.

As a result, the fund’s total net assets declined to C$105 billion ($82.4 billion) from C$109 billion. The fund also reported three-, five-, 10-, and 20-year annualized returns of 3.7%, 6.5%, 6.7%, and 6.0%, respectively.

Author(s): Michael Katz

Publication Date: 1 March 2021

Publication Site: ai-CIO

Multiemployer Pensions Reach Highest Funding Levels in 13 Years

Mary Pat Campbell

Link: https://www.ai-cio.com/news/multiemployer-pensions-reach-highest-funding-levels-13-years/?

Excerpt:

Robust investment returns helped boost the aggregate funded percentage of all US multiemployer pension plans to 88% at the end of 2020, from 85% a year earlier—the highest since before the global financial crisis at the end of 2007—according to consulting and actuarial firm Milliman.  

The strong performance came despite a turbulent year of market volatility due to the impact of the COVID-19 pandemic. The volatility caused those same plans’ funded ratio to plunge to 72% during the first quarter of the year, which was the largest quarterly drop in funded percentage since 2007. That was followed by a rebound to 82% in the second quarter, which was the largest quarterly increase in funded percentage since 2007.

Author(s): Michael Katz

Publication Date: 22 February 2021

Publication Site: ai-CIO

NYC Pension Funds Rebound After Missing Fiscal 2020 Target

Mary Pat Campbell

Link: https://www.ai-cio.com/news/nyc-pension-funds-rebound-missing-fiscal-2020-target/

Excerpt:

New York City’s five pension systems have bounced back from a 4.4% return for fiscal year 2020 that missed an actuarial target of 7%, to return roughly 18% in the first seven months of fiscal year 2021, according to a report from New York State Comptroller Thomas DiNapoli.

Since fiscal 2012, the pension funds, which had approximately $239.8 billion in assets under management (AUM) as of November, have earned an average of 7.5% annually on their investments.

According to the Comptroller Office’s Review of the Financial Plan of the City of New York, pension contributions have stabilized after growing rapidly for many years, mainly due to higher-than-expected investment returns and savings from lower-cost pension plans enacted for employees hired after March 2012. However, the contributions are still forecast to total $10.1 billion in fiscal 2022.

Author(s): Michael Katz

Publication Date: 25 February 2021

Publication Site: ai-CIO

Pension Fund Assets in Largest Markets Rise 11% in 2020

Mary Pat Campbell

Link: https://www.ai-cio.com/news/pension-fund-assets-largest-markets-rise-11-2020/

Excerpt:

Pension fund assets within the world’s 22 largest markets saw double-digit gains for the second straight year in 2020, climbing 11% to $52.5 trillion, according to the 2021 “Global Pension Assets Study” from Willis Towers Watson’s Thinking Ahead Institute.

“In what was a highly tumultuous year, pension funds continued to grow strongly in 2020, underpinned by ongoing multi-decade themes such as the rotation from equities to alternatives and the growth of DC [defined contribution], now the dominant global pensions model,” Marisa Hall, co-head of the Thinking Ahead Institute, said in a statement.

Over the past five, 10, and 20 years, those assets have seen average annualized returns of 8.0%, 6.2%, and 6.1%, respectively, up from 5.3%, 6.5%, and 5.4%, respectively, over the same time periods last year.

Author(s): Michael Katz

Publication Date: 18 February 2021

Publication Site: ai-CIO