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Tuesday, March 31, 2015

Ever wonder why the pension system is underfunded?

Posted by Lou on March 26, 2015

I know I wonder why the pension system is underfunded. Sometimes, it’s because the fees being paid to the Governor’s former investment firm is being paid the highest fees of any other hedge fund manager in the state. Sometimes it’s because the Governor doesn’t want to deposit the surplus that she is legally required to. “Legally?” you say? Yes, it was a law she endorsed as treasurer, in an effort to increase the funding ratio as soon as possible.

I know one reason why it isn’t underfunded: state workers have paid their required percentage from every paycheck they have ever earned. Make sure you let your state representatives and senators know that fact when they try to steal from us again.

Retirement system website

Posted by Lou on March 25, 2015

As promised during today’s meeting, the website to view your retirement benefit estimates is https://www.ersri.org/home.jsp. You can create an account with your personal information, and review your service time, contributions, estimated retirement date, etc.

We are still working on getting any financial/actuarial data, as promised by Lynn Loveday, from Council 94.

Thanks,
Lou

Pension settlement questions?

Posted by Lou on March 23, 2015

Hello brothers and sisters,

In advance of the pension settlement meeting, we would like to solicit questions for Justice Frank Williams, who will be in attendance at the meeting. If you would like to submit a question, please send it to louis.maccarone@local2881.org or leave a comment on this post using the link below. We will aggregate the questions and submit them in advance in hopes that we will get better answers. We welcome any and all questions, so please feel free to submit any question you have.

Thanks,
Lou

Pension calculator

Posted by Lou on

Brothers and sisters,

In the midst of the maelstrom that is our pension saga, Paul and I finally got a chance to do something that we should have done long ago. We can now answer the question: “How long will my contributions to the pension system last me in retirement, even if the state didn’t contribute a dime to me?” The answer might surprise you (hint: it’s longer than you think).

Go to Local 2881 pension calculator, download a copy of the file, and play around with the inputs to match your scenario. The model allows you to input assumptions for:

  • Yearly raises (i.e. raises associated with contracts)
  • Starting salary
  • Years of service
  • Whether or not you get longevity increases
  • COLA percentages
  • Whether the COLA applies to your whole pension benefit, or a portion of it
  • Return on investment over the life of your money

The accrual schedule follows Schedule B (the 2005 pension changes). If you are not on Schedule B, or have accrued at another rate, you can input your own accrual in Column I of the “SalaryAccrual” sheet.

If you have any questions or comments, please feel free to contact me, or leave a comment below.

Thanks
Lou

Editorial rebuttal

Posted by Lou on March 19, 2015

The Providence Journal editorial board published this editorial on the front page of providencejournal.com. I’d like to rebut this piece.

We have yet to see the details, but it is encouraging that a settlement of a lawsuit over the state’s landmark pension reform may be in the works. Former Rhode Island Chief Justice Frank Williams, who has worked in semi-retirement helping to arbitrate cases to avoid trials, has been enlisted to try to reach a compromise, and he plans to make a presentation to retirees next week.

It is clear that both parties would benefit from a resolution that prevents a court trial, ending the ongoing games of Russian roulette with Rhode Island’s financial future.
The background is well known. In 2011, the General Assembly bravely passed a measure to reform pensions by suspending annual cost-of-living adjustments for current retirees, raising the retirement age and moving future retirees into a plan that combined a defined pension benefit with a 401(k)-style contribution plan familiar to many taxpayers in the private sector.

This was done, not to be punitive, but to retain generous retirements for public employees while keeping the state afloat.

Generous? Under what measure? Where does Rhode Island’s retirement benefit rank among state retirement benefits across the country? I’m willing to bet it isn’t far from the bottom.

For those with college degrees, like a significant portion of my members, it is common to get a job that provides a 401(k) style retirement plan. However, for the vast majority of those plans, the employer will match a lot more than 1% of salary when the worker puts in 5% to their retirement account. And there are a great many choices of providers and funds, rather than being restricted to a limited set of TIAA-CREF offerings, and not even their highest performing funds at that.

Under the unsustainable old system, Rhode Island taxpayers, already among America’s most heavily taxed people, would have had to come up with an additional $4 billion over the next 20 years, something clearly impossible. Preserving the old system would have pushed Rhode Island into a hellish downward spiral, with no evident means of turning the state around, something that would have scarred public employees along with everyone else.
That did not stop public employee unions from balking at this attempt to govern for the common good. They sued.

The unions did not balk at an “attempt to govern for the common good”, it was a balk at the blatant theft of an agreed-upon benefit provided as a condition of employment. Furthermore, the underlying assumptions that the Governor used to demonstrate a catastrophe were wildly flawed. It was a balk at the fourth change to a pension system that we were told would be fixed after accepting the three other changes, both to vested and non-vested employees.

Yet even union leaders recognized there was a limited amount of blood to squeeze out of a turnip. A year ago, they approved a deal that would modify the reform to make it more punishing to taxpayers without destroying the state financially.

Why is the that taxpayers are being punished, but state previously that the reform was “not done to be punitive?”

Then-General Treasurer (now Governor) Gina Raimondo, who helped cut the deal, said it would have preserved 95 percent of the savings — a move we supported. Unfortunately, a small band of public employees — a mere majority of municipal police officers — blocked that attempt at compromise.

The only reason why the previous settlement attempt wasn’t resoundingly defeated was due to the dictatorial style of vote where non-votes counted as votes to accept the settlement. That voting process is more like something we would expect out of North Korea, not out of a labor union, or state government.

Superior Court Judge Sarah Taft-Carter this month appointed Mr. Williams to serve as “special master” to try to bring the parties together again. It now appears the state has made a “final” offer, which will be put to retirees for a vote Monday at the Twin River Casino — a fitting site, given the high stakes riding on the outcome.
There is little time before this matter goes to trial next month. But this case could drag on for years, with an appeal to the Supreme Court.
Fortunately, it appears that some union officials do not want to strangle the state financially, which would badly hurt their members. Judge Williams has a record of finding areas of agreement. If a deal does not batter taxpayers too hard, it makes sense to stave off an expensive and contentious court case, with the potential for outright disaster to Rhode Island.

Again, why are taxpayers “battered” while you cast public employees as the less than honorable? The court case may be expensive and contentious, but the state’s costs are being paid out of the pension fund. So in essence, we are funding both sides of the lawsuit.

The truth of the matter is that public employees (who are taxpayers too!) have consistently paid their share of their salary into the pension fund. It has been politicians and big-wigs who have taken every chance they can to milk the system with sweetheart deals and lifetime six-figure pensions for the highest paid retirees. All we’re asking is for the state to give us a fair chance and work with us to resolve this unfortunate scenario. Not manufacture a crisis during a downturn in the market, use faulty assumptions in their analysis, or blame us for their underachieving investments (which is impacted by exorbitant fees to the Governor’s Wall Street brethren).

If there is a “moral obligation” to Wall Street investors to pay back 38 Studios loans, why is there no “moral obligation” to employees who spend their life in public service? We aren’t the bad guys. We just want a fair shake.

If you are as dismayed as I am at the continuing saga of this pension fiasco, please share your comments below.

Pension Settlement Meeting

Posted by Lou on

Council 94 and Justice Williams will be coming to the cafeteria at 235 Promenade Street on Wednesday, March 25 at 8:30am to discuss the proposed settlement that has been buzzing around. If you have not seen a copy of the proposed settlement summary, contact a member of the executive board.

Please make every effort to attend, and bring your questions and comments. Voting on the settlement will take place after the meeting and on Thursday at locations to be determined.

Links for thought

Posted by Lou on March 18, 2015

Who is the real villain in the pension crisis?

Public sector workers earn less (benefits included).

Debunking the myth of the overcompensated public sector employee (PDF of full report)

I’d love to see a revised version of that last report that accounts for all the pension changes across the country…

Pension Litigation – New Proposed Settlement

Posted by Lou on March 17, 2015

A message was received today from Council 94:

Tonight, RI Council 94’s Executive Board voted unanimously to endorse and submit the State’s Final Offer to settle the pension litigation before trial for your consideration.

Every state and municipal local union, whose members belong to the Employees’ Retirement System of Rhode Island (ERSRI) or Municipal Employees’ Retirement System (MERS), will hold a special meeting to review the terms and vote on the proposed settlement.

All Council 94 members, who are members of the ERSRI or MERS retirement systems, can vote to accept or reject the proposed settlement at the local union’s special meeting.

You will be notified by your local union of the date, time, and location of the special meeting.

All votes must be tabulated by Friday, March 27th 2015.

Please make every effort to attend your local union’s special meeting.

In solidarity,

J. Michael Downey,
President, RI Council 94, AFSCME, AFL-CIO

As of right now, it is unknown when and where Local 2881’s voting will be taking place, or even what the actual settlement proposal is. It is being reported by Ted Nesi of WPRI.com that the proposed settlement has been circulating among state employees, but we have not received it from Council 94 yet.

The executive board will pass along any new information as we receive it. If you have questions about the assumed settlement proposal, feel free to post your question in the comments, and we will try to answer it to the best of our ability.