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  1. #11
    Guest

    Re: Financial Review Board

    Quote Originally Posted by 99Guest
    Increase employee contributions to the pension fund - We recently did this but it is something that can be explored again.

    2. Adjust the calculation of benefits - This can be done in different ways, including decreasing the multiplier, capping accrued benefits, increasing the age/service requirement, changing the calculation of Average Final Compensation (AFC), and/or increasing the retirement age.

    3. Make changes to the Deferred Retirement Option Program (DROP) - Why not explore increasing the years of service until you are eligible to DROP from 20 -25 years?

    I agree in making changes, but for those of us already half way there it would be unfair to increase the age/service requirement. Same as years of service to DROP. Let this apply to new employees from here on out.....not those that have the end in sight.
    Everything has to be on the table to negotiate in good faith, but it is a two way street. I say we look at increasing salaries with a lengthy contract and I fund my own 401. How much would that cost compared to a defined benefit plan.

  2. #12
    Guest

    Re: Financial Review Board

    Here are some reasons why we need to keep our current plan and the falsehoods and misnomers offered by the 2011 Collins Institute's report.

    To: All Florida Pension Plans
    From: Klausner Kaufman Jensen & Levinson
    Re: LeRoy Collins Institute September 2012 Report
    Date: October 5, 2012

    On September 25, the LeRoy Collins Institute released a new white paper entitled Years in the Making: Florida's Municipal Pension Plans (hereinafter the 2012 "Study"), a continuation of their earlier 2011 report regarding municipal pension plans in Florida, The purpose of this memo is to share our thoughts with clients about the important role of defined benefit ("DB") plans in the public sector. We will use the 2012 Study as a foil to discuss retirement security and the advantages provided by DB plans. We also encourage clients to discuss the "trends" described by the 2012 Study with their actuary, so as to compare whether and how the new Study's conclusions have any bearing on their plan.

    This memo begins with an overview of the 2012 Study. The second half of the memo addresses the underappreciated lifetime security and retirement income provided by DB plans and what some have described as the failure of the 401 (k) experiment. In summary, the underlying purpose of this memo is to provide a broader and longer term perspective than the Collins Study, that is less hostile to public employee benefits.

    2012 Collins Study
    By way of background, the 2012 Study uses Annual Reports from the Department of Management Services ("OMS") from 2005 to 2011 to answer the following question posed by the Study's authors: whether Florida's municipal pension plans are fundamentally healthy and just need time to weather the current financial storm or have structural problems that require significant repair.

    The Study doesn't justify, explain or define what would constitute a structural problem, Nor does the Study hint at any constructive "structural repairs" to the self-identified problematic trends. With that said, as set forth below, the Study's findings are generally unremarkable for trustees who are familiar with DB plan funding and the undeniable poor investment experience over the past decade.

    More remarkable, however, and potentially suggestive of the Study's agenda, is the concluding sentence that plan costs are "adding insult to injury for many cities struggling to make ends meet." Yet, no mention is made of the hundreds of thousands of Floridians who earned their DB pensions during a lifetime of public service, or the advantages of DB plans compared to their inferior alternatives.

    According to the Study's introductory notes, the LeRoy Collins Institute attempts to report on the ''typical'' pension plan. It uses median values to do so, excluding variations which are deemed to be outliers. The number of outliers excluded from the universe of 492 plans is not identified.

    Interestingly, in comparing plan data from 2001 to 2010, the 2012 Study fails to mention that a not insignificant number of plans were closed during this time period. We understand from the Division of Retirement that at least 67 of the municipal plans in Florida are currently closed to new participants. This fact may skew the Study's results, particularly with regard to the ratio of retirees to active participants. A closed plan, by definition, does not add any new members. Similarly, future payroll growth assumptions are irrelevant for a closed plan with no remaining active members.

    The distinction between open and closed plans is not addressed in the 2012 study. Moreover, the growth of pension contributions, as a percentage of covered payroll, becomes increasingly meaningless in the context of a closed plan. The Study concludes with the following summary of its findings: (i) concerns about underfunded
    municipal pension plans were not caused by the downturn in the stock market, but rather under funding that began before the market fell; (ii) pension contributions have substantially increased from 2005 - 2011; (iii) local governments are picking up more of the pension cost; (iv) the number of retirees is growing and is "outstripping" the growth of active participants; (v) plans tend to overestimate assumed salary growth and investment earnings; (vi) payments for unfunded liabilities represent a growing proportion of annual pension contributions.

    The Study's first finding announces that funding levels have declined nearly every year since 2001.

    According to the Study, "the problems facing many municipal pension plans are long-standing", yet the Study acknowledges that in 2001 the typical municipal plan was nearly 100% funded. In other words, the Study effectively minimizes the downturn in the stock market over the past decade, when the past ten years were book-marked by some of the most severe market dislocations in modem history. It is therefore puzzling why the Study concludes on page 12 by stating that the "underfunding began before the stock market fell." Moreover, the underlying resiliency of the plans' investment portfolios is too easily dismissed by the Study. Favorable market returns for the fiscal
    year that just ended on September 30 are of course omitted.

    The Study compares funding ratios from 2001 to 2010. We remind readers of two bear markets in equities, the bursting of the tech and dot.com bubble, Enron, WorldCom, the9/11 tragedy, two wars, the housing bubble, the subprime mess, the Lehman bankruptcy, the government takeover of Fannie Mae and Freddie Mac, AIG, and the new vocabulary of the Great Recession, the worst recession in seven decades. Indeed, as measured by the S&P 500, the calendar decade studied by the Collins Institute ended with a negative total return. Had an unlucky individual investor bought the S&P 500 on the last day of 1999 @ 1469, on a pure price basis they would have lost 24% as the index closed 2009 at 1115. Including dividends, the S&P lost 10% from January 1, 2000 to December 31, 2009. As a consequence, even well diversified portfolios were not immunefrom losses.

    During this period, many individual investors in defined contribution ("DC") plans have had to postpone retirement as their DC and 401 (k) balances were decimated. By not acting in accordance with a long-term investment policy, too many individual investors reacted emotionally and sold equities during market lows, prior to the current rebound. By contrast, investment decisions in DB plans are made by professional money managers overseen by fiduciaries. As a result, DB plans were regularly investing and rebalancing their portfolios during market downturns. This is one of the reasons why over the long term DB plans consistently outperform their assumed investment rate of return. This also illustrates the wisdom of Florida statutory requirements which mandate payment of actuarially determined contributions on an annual basis. By preventing plan sponsors from taking "funding holidays", DB plans are empowered to stick with their long term investment strategies.

    As for its second and third findings, the Study observes that over the past seven years "local governments are picking up more of the pension costs, especially for public safety plans." "While employee and state contributions are fairly stable," the Study expresses concern that the costs for municipalities are growing. This should not be a surprise, however, in light of the underlying investment and actuarial experience. Trustees understand that increasing employer funding obligations, by design, is what happens in a DB plan when investment risk rests with the plan sponsor. This fact illustrates why the 401(k) experiment is considered by many to be a failure, as
    investment risk lies entirely with the individual investor.

    No surprise for trustees, the Study illustrates the consistency by which Florida municipal DB plans have invested by employing long-term investment strategies. Unlike individual investors, the 2012 Study necessarily concedes that Florida municipal DB plans maintained "a consistent asset allocation strategy" during this challenging market environment and were not "chasing" returns or market timing. The Study describes an unattributed but "widely held concern that pension investors will seek to recover' losses' by shifting to riskier stocks," but the Study's analysis actually provides proof
    to the contrary for Florida municipal DB plans.

    Unlike DB plans, DC plan participants are generally required to reduce their exposure to market risk and thereby lower their expected returns as they age. By contrast, DB plans, through pooling market and longevity risk, are able to invest more cost effectively and obtain better long term investment returns. For any given level of retirement benefits, DB plans are less expensive than DC plans.

    The Study's fourth finding discovers that the number of retirees is growing and is "outstripping" the growth of active participants. In dramatic fashion, the Study is troubled by the fact that payouts may have exceeded contributions in 2010. Yet, actuaries and trustees are generally not concerned, as this merely reflects the maturation of the average DB plan. After all, the purpose for accumulating
    pension assets is not to store them up for perpetuity, but to pay them out. One should not be surprised or necessarily concerned when a pension plan distributes pension benefits.

    Additionally, the Study's analysis is potentially flawed as it does not adjust for the fact that approximately 13% of the plans in the Study are closed and have no new active members. On page 5, the Study attributes the increase in the number of retirees to "several factors, including demographic shifts and concerns that retirement incentives were going to become less generous". Left entirely unmentioned is the downsizing, hiring freezes, and layoffs that have been implemented in recent years. Again, thankfully, many of these retirees have secure income from their DB
    pensions.

    Ironically, to the extent that the Collins Institute or some of its supporters may be seeking to replace DB plans with DC plans, the net result would be to accelerate the replacement of participants with retirees. Actuarial studies have shown that closing a plan is likely to cost more over the short term. Any long-term cost savings of switching to a DC plan are uncertain. We would argue that closing or terminating a DB plan after adverse actuarial experience is analogous to selling out of the market after a major correction. In hindsight, this often turns out to be a regrettable decision.

    The Study's final findings express concern about plans overestimating assumed salary growth and investment earnings. Here too, one might question the Study's analysis. On page 7 the Study stresses the "consistent underestimation" of salary growth during 2004-2007. Less attention is paid to the more pronounced reverse trend in salary data starting in 2008. We understand that the deceleration of wage growth has generally continued into 2012, which will contribute to future actuarial gains. In fact, some actuaries are recommending reductions in the salary assumption as an offset to the
    impact of lowering the investment assumption. Accordingly, the setting of assumptions is a dynamic process which should self-correct over time with actuarial experience.

    As described by the Study, it was "unexpected" that plans did not meet their investment assumptions in 2004 or 2005. We invite the Study's authors to revisit the data. The Study fails to explicitly recognize that plan data is generally reported on a fiscal year basis. on a calendar year basis. Moreover, not all plans submit annual actuarial valuations. Accordingly, greater transparency would result if the Study disclosed how many plans are measured by each statistic. For example, the Study, which relies on the Division of Retirement's Annual Reports, does not disclose that valuations for the plan year ending 2010 were only available for at most 344 plans, not the full universe of 492 plans. Therefore, if the Study exclusively relies on the Division of Retirement's annual reports, at best 70% of the universe was analyzed in 2010 (before removing outliers, which are also not quantified). Making a larger point, we invite the Collins Institute to objectively examine longer term data and trends, without seizing on market turmoil to
    undermine a fundamentally sound and resilient retirement structure.

    http://robertdklausner.com/wp-content/u ... 900631.pdf

  3. #13
    Guest

    Re: Financial Review Board

    Quote Originally Posted by Keep the DB Plan
    Here are some reasons why we need to keep our current plan and the falsehoods and misnomers offered by the 2011 Collins Institute's report.

    To: All Florida Pension Plans
    From: Klausner Kaufman Jensen & Levinson
    Re: LeRoy Collins Institute September 2012 Report
    Date: October 5, 2012

    On September 25, the LeRoy Collins Institute released a new white paper entitled Years in the Making: Florida's Municipal Pension Plans (hereinafter the 2012 "Study"), a continuation of their earlier 2011 report regarding municipal pension plans in Florida, The purpose of this memo is to share our thoughts with clients about the important role of defined benefit ("DB") plans in the public sector. We will use the 2012 Study as a foil to discuss retirement security and the advantages provided by DB plans. We also encourage clients to discuss the "trends" described by the 2012 Study with their actuary, so as to compare whether and how the new Study's conclusions have any bearing on their plan.

    This memo begins with an overview of the 2012 Study. The second half of the memo addresses the underappreciated lifetime security and retirement income provided by DB plans and what some have described as the failure of the 401 (k) experiment. In summary, the underlying purpose of this memo is to provide a broader and longer term perspective than the Collins Study, that is less hostile to public employee benefits.

    2012 Collins Study
    By way of background, the 2012 Study uses Annual Reports from the Department of Management Services ("OMS") from 2005 to 2011 to answer the following question posed by the Study's authors: whether Florida's municipal pension plans are fundamentally healthy and just need time to weather the current financial storm or have structural problems that require significant repair.

    The Study doesn't justify, explain or define what would constitute a structural problem, Nor does the Study hint at any constructive "structural repairs" to the self-identified problematic trends. With that said, as set forth below, the Study's findings are generally unremarkable for trustees who are familiar with DB plan funding and the undeniable poor investment experience over the past decade.

    More remarkable, however, and potentially suggestive of the Study's agenda, is the concluding sentence that plan costs are "adding insult to injury for many cities struggling to make ends meet." Yet, no mention is made of the hundreds of thousands of Floridians who earned their DB pensions during a lifetime of public service, or the advantages of DB plans compared to their inferior alternatives.

    According to the Study's introductory notes, the LeRoy Collins Institute attempts to report on the ''typical'' pension plan. It uses median values to do so, excluding variations which are deemed to be outliers. The number of outliers excluded from the universe of 492 plans is not identified.

    Interestingly, in comparing plan data from 2001 to 2010, the 2012 Study fails to mention that a not insignificant number of plans were closed during this time period. We understand from the Division of Retirement that at least 67 of the municipal plans in Florida are currently closed to new participants. This fact may skew the Study's results, particularly with regard to the ratio of retirees to active participants. A closed plan, by definition, does not add any new members. Similarly, future payroll growth assumptions are irrelevant for a closed plan with no remaining active members.

    The distinction between open and closed plans is not addressed in the 2012 study. Moreover, the growth of pension contributions, as a percentage of covered payroll, becomes increasingly meaningless in the context of a closed plan. The Study concludes with the following summary of its findings: (i) concerns about underfunded
    municipal pension plans were not caused by the downturn in the stock market, but rather under funding that began before the market fell; (ii) pension contributions have substantially increased from 2005 - 2011; (iii) local governments are picking up more of the pension cost; (iv) the number of retirees is growing and is "outstripping" the growth of active participants; (v) plans tend to overestimate assumed salary growth and investment earnings; (vi) payments for unfunded liabilities represent a growing proportion of annual pension contributions.

    The Study's first finding announces that funding levels have declined nearly every year since 2001.

    According to the Study, "the problems facing many municipal pension plans are long-standing", yet the Study acknowledges that in 2001 the typical municipal plan was nearly 100% funded. In other words, the Study effectively minimizes the downturn in the stock market over the past decade, when the past ten years were book-marked by some of the most severe market dislocations in modem history. It is therefore puzzling why the Study concludes on page 12 by stating that the "underfunding began before the stock market fell." Moreover, the underlying resiliency of the plans' investment portfolios is too easily dismissed by the Study. Favorable market returns for the fiscal
    year that just ended on September 30 are of course omitted.

    The Study compares funding ratios from 2001 to 2010. We remind readers of two bear markets in equities, the bursting of the tech and dot.com bubble, Enron, WorldCom, the9/11 tragedy, two wars, the housing bubble, the subprime mess, the Lehman bankruptcy, the government takeover of Fannie Mae and Freddie Mac, AIG, and the new vocabulary of the Great Recession, the worst recession in seven decades. Indeed, as measured by the S&P 500, the calendar decade studied by the Collins Institute ended with a negative total return. Had an unlucky individual investor bought the S&P 500 on the last day of 1999 @ 1469, on a pure price basis they would have lost 24% as the index closed 2009 at 1115. Including dividends, the S&P lost 10% from January 1, 2000 to December 31, 2009. As a consequence, even well diversified portfolios were not immunefrom losses.

    During this period, many individual investors in defined contribution ("DC") plans have had to postpone retirement as their DC and 401 (k) balances were decimated. By not acting in accordance with a long-term investment policy, too many individual investors reacted emotionally and sold equities during market lows, prior to the current rebound. By contrast, investment decisions in DB plans are made by professional money managers overseen by fiduciaries. As a result, DB plans were regularly investing and rebalancing their portfolios during market downturns. This is one of the reasons why over the long term DB plans consistently outperform their assumed investment rate of return. This also illustrates the wisdom of Florida statutory requirements which mandate payment of actuarially determined contributions on an annual basis. By preventing plan sponsors from taking "funding holidays", DB plans are empowered to stick with their long term investment strategies.

    As for its second and third findings, the Study observes that over the past seven years "local governments are picking up more of the pension costs, especially for public safety plans." "While employee and state contributions are fairly stable," the Study expresses concern that the costs for municipalities are growing. This should not be a surprise, however, in light of the underlying investment and actuarial experience. Trustees understand that increasing employer funding obligations, by design, is what happens in a DB plan when investment risk rests with the plan sponsor. This fact illustrates why the 401(k) experiment is considered by many to be a failure, as
    investment risk lies entirely with the individual investor.

    No surprise for trustees, the Study illustrates the consistency by which Florida municipal DB plans have invested by employing long-term investment strategies. Unlike individual investors, the 2012 Study necessarily concedes that Florida municipal DB plans maintained "a consistent asset allocation strategy" during this challenging market environment and were not "chasing" returns or market timing. The Study describes an unattributed but "widely held concern that pension investors will seek to recover' losses' by shifting to riskier stocks," but the Study's analysis actually provides proof
    to the contrary for Florida municipal DB plans.

    Unlike DB plans, DC plan participants are generally required to reduce their exposure to market risk and thereby lower their expected returns as they age. By contrast, DB plans, through pooling market and longevity risk, are able to invest more cost effectively and obtain better long term investment returns. For any given level of retirement benefits, DB plans are less expensive than DC plans.

    The Study's fourth finding discovers that the number of retirees is growing and is "outstripping" the growth of active participants. In dramatic fashion, the Study is troubled by the fact that payouts may have exceeded contributions in 2010. Yet, actuaries and trustees are generally not concerned, as this merely reflects the maturation of the average DB plan. After all, the purpose for accumulating
    pension assets is not to store them up for perpetuity, but to pay them out. One should not be surprised or necessarily concerned when a pension plan distributes pension benefits.

    Additionally, the Study's analysis is potentially flawed as it does not adjust for the fact that approximately 13% of the plans in the Study are closed and have no new active members. On page 5, the Study attributes the increase in the number of retirees to "several factors, including demographic shifts and concerns that retirement incentives were going to become less generous". Left entirely unmentioned is the downsizing, hiring freezes, and layoffs that have been implemented in recent years. Again, thankfully, many of these retirees have secure income from their DB
    pensions.

    Ironically, to the extent that the Collins Institute or some of its supporters may be seeking to replace DB plans with DC plans, the net result would be to accelerate the replacement of participants with retirees. Actuarial studies have shown that closing a plan is likely to cost more over the short term. Any long-term cost savings of switching to a DC plan are uncertain. We would argue that closing or terminating a DB plan after adverse actuarial experience is analogous to selling out of the market after a major correction. In hindsight, this often turns out to be a regrettable decision.

    The Study's final findings express concern about plans overestimating assumed salary growth and investment earnings. Here too, one might question the Study's analysis. On page 7 the Study stresses the "consistent underestimation" of salary growth during 2004-2007. Less attention is paid to the more pronounced reverse trend in salary data starting in 2008. We understand that the deceleration of wage growth has generally continued into 2012, which will contribute to future actuarial gains. In fact, some actuaries are recommending reductions in the salary assumption as an offset to the
    impact of lowering the investment assumption. Accordingly, the setting of assumptions is a dynamic process which should self-correct over time with actuarial experience.

    As described by the Study, it was "unexpected" that plans did not meet their investment assumptions in 2004 or 2005. We invite the Study's authors to revisit the data. The Study fails to explicitly recognize that plan data is generally reported on a fiscal year basis. on a calendar year basis. Moreover, not all plans submit annual actuarial valuations. Accordingly, greater transparency would result if the Study disclosed how many plans are measured by each statistic. For example, the Study, which relies on the Division of Retirement's Annual Reports, does not disclose that valuations for the plan year ending 2010 were only available for at most 344 plans, not the full universe of 492 plans. Therefore, if the Study exclusively relies on the Division of Retirement's annual reports, at best 70% of the universe was analyzed in 2010 (before removing outliers, which are also not quantified). Making a larger point, we invite the Collins Institute to objectively examine longer term data and trends, without seizing on market turmoil to
    undermine a fundamentally sound and resilient retirement structure.

    http://robertdklausner.com/wp-content/u ... 900631.pdf

    This looks like the Collins Institute slanted their report to fit the desired outcome in the question posed to themselves. Do you think it would be in favor of anything different? So, this presents some interesting points, especially those that relate to why a DB can endure tougher times than a singe investor with a DC plan. The very design of DB plans make them more tolerable to macro-economic issues. A reason that shouldn't be simply overlooked.

  4. #14
    Guest

    Re: Financial Review Board

    LEAVE THE PBA- YOUR REPS ARE THEIR TO LINE THIER OWN POCKETS!!

    THE PALM BEACH PBA IS TO BLAME FOR LACK OF RAISES AND EVERYTHING ELSE THAT SETS THE TABLE TO SCREW YOU OUT OF WHAT YOU DESERVE FOR PUTTING YOUR LIVES ON THE LINE FOR THIS FILTHY CORRUPT CITY!

    I'VE BEEN GONE SINCE 2000, SO PLEASE LET ME KNOW WHO YOUR PBA REPS ARE AND I'LL TELL YOU THE TRUTH WHO THEY ACTUALLY ARE. WHO'S ON THE PENSION BOARD, WHAT LAWYERS (WHO SHOULD BE DISBARRED) AT THE PALM BEACH COUNTY PBA ARE REPRESENTING YOU?

    IF YOU'RE NOT PBSO-YOU MEAN NOTHING TO THE PBA!

    THE DAYS OF DON WEST KILLING A GUY WITH KEYS IN HIS HANDS AND GETTING HIS JOB BACK ARE OVER!

    REMEMBER MCALPINES? JOYCE THE VOICE? THE SAUNDERS AND APPLE SHOW? SAL ARENA STATING AS A PBA REP, I'M NOT CONCERNED WITH HEALTH INSURANCE BECAUSE MY WIFE HAS FULL COVERAGE,

    LET ME KNOW IF THESE PEOPLE STILL EXIST AND I WILL SUPPLY YOU WITH ALL THE NECESSARY TOOLS AND 10-43.

    HOW'S CAPTION MUSCO AND DET, GENE AND HIS WIFE DOING?

    LONG LIVE CHIEF OVERMANN AND LANTANA LINCOLN!!!! DON'T FORGET GLENN GLOSS' AFTER HOURS RIDE TO HIGHLAND BEACH.

    LAST QUESTION, IS SWIGGY STILL ALIVE?

    KEEP ME POSTED
    24 YEARS DBPD

  5. #15
    Guest

    Re: Financial Review Board

    Quote Originally Posted by retired 111 zone LEO
    LEAVE THE PBA- YOUR REPS ARE THEIR TO LINE THIER OWN POCKETS!!

    THE PALM BEACH PBA IS TO BLAME FOR LACK OF RAISES AND EVERYTHING ELSE THAT SETS THE TABLE TO SCREW YOU OUT OF WHAT YOU DESERVE FOR PUTTING YOUR LIVES ON THE LINE FOR THIS FILTHY CORRUPT CITY!

    I'VE BEEN GONE SINCE 2000, SO PLEASE LET ME KNOW WHO YOUR PBA REPS ARE AND I'LL TELL YOU THE TRUTH WHO THEY ACTUALLY ARE. WHO'S ON THE PENSION BOARD, WHAT LAWYERS (WHO SHOULD BE DISBARRED) AT THE PALM BEACH COUNTY PBA ARE REPRESENTING YOU?

    IF YOU'RE NOT PBSO-YOU MEAN NOTHING TO THE PBA!

    THE DAYS OF DON WEST KILLING A GUY WITH KEYS IN HIS HANDS AND GETTING HIS JOB BACK ARE OVER!

    REMEMBER MCALPINES? JOYCE THE VOICE? THE SAUNDERS AND APPLE SHOW? SAL ARENA STATING AS A PBA REP, I'M NOT CONCERNED WITH HEALTH INSURANCE BECAUSE MY WIFE HAS FULL COVERAGE,

    LET ME KNOW IF THESE PEOPLE STILL EXIST AND I WILL SUPPLY YOU WITH ALL THE NECESSARY TOOLS AND 10-43.

    HOW'S CAPTION MUSCO AND DET, GENE AND HIS WIFE DOING?

    LONG LIVE CHIEF OVERMANN AND LANTANA LINCOLN!!!! DON'T FORGET GLENN GLOSS' AFTER HOURS RIDE TO HIGHLAND BEACH.

    LAST QUESTION, IS SWIGGY STILL ALIVE?

    KEEP ME POSTED
    24 YEARS DBPD
    Get lost you loser. The guys that are reps weren't even here when you were. Go away punk!

  6. #16
    Guest

    Re: Financial Review Board

    Quote Originally Posted by retired 111 zone LEO
    LEAVE THE PBA- YOUR REPS ARE THEIR TO LINE THIER OWN POCKETS!!

    THE PALM BEACH PBA IS TO BLAME FOR LACK OF RAISES AND EVERYTHING ELSE THAT SETS THE TABLE TO SCREW YOU OUT OF WHAT YOU DESERVE FOR PUTTING YOUR LIVES ON THE LINE FOR THIS FILTHY CORRUPT CITY!

    I'VE BEEN GONE SINCE 2000, SO PLEASE LET ME KNOW WHO YOUR PBA REPS ARE AND I'LL TELL YOU THE TRUTH WHO THEY ACTUALLY ARE. WHO'S ON THE PENSION BOARD, WHAT LAWYERS (WHO SHOULD BE DISBARRED) AT THE PALM BEACH COUNTY PBA ARE REPRESENTING YOU?

    IF YOU'RE NOT PBSO-YOU MEAN NOTHING TO THE PBA!

    THE DAYS OF DON WEST KILLING A GUY WITH KEYS IN HIS HANDS AND GETTING HIS JOB BACK ARE OVER!

    REMEMBER MCALPINES? JOYCE THE VOICE? THE SAUNDERS AND APPLE SHOW? SAL ARENA STATING AS A PBA REP, I'M NOT CONCERNED WITH HEALTH INSURANCE BECAUSE MY WIFE HAS FULL COVERAGE,

    LET ME KNOW IF THESE PEOPLE STILL EXIST AND I WILL SUPPLY YOU WITH ALL THE NECESSARY TOOLS AND 10-43.

    HOW'S CAPTION MUSCO AND DET, GENE AND HIS WIFE DOING?

    LONG LIVE CHIEF OVERMANN AND LANTANA LINCOLN!!!! DON'T FORGET GLENN GLOSS' AFTER HOURS RIDE TO HIGHLAND BEACH.

    LAST QUESTION, IS SWIGGY STILL ALIVE?

    KEEP ME POSTED
    24 YEARS DBPD
    I do agree with PBSO comment....more attention for them, less for DBPD.
    McAlpines, Joyce, Musco and Apple gone.
    Saunders, Gene and Sal still there.
    Amazing your anger lingers 13 years later

  7. #17
    Guest

    Re: Financial Review Board

    Quote Originally Posted by Keep the DB Plan
    Here are some reasons why we need to keep our current plan and the falsehoods and misnomers offered by the 2011 Collins Institute's report.

    To: All Florida Pension Plans
    From: Klausner Kaufman Jensen & Levinson
    Re: LeRoy Collins Institute September 2012 Report
    Date: October 5, 2012

    On September 25, the LeRoy Collins Institute released a new white paper entitled Years in the Making: Florida's Municipal Pension Plans (hereinafter the 2012 "Study"), a continuation of their earlier 2011 report regarding municipal pension plans in Florida, The purpose of this memo is to share our thoughts with clients about the important role of defined benefit ("DB") plans in the public sector. We will use the 2012 Study as a foil to discuss retirement security and the advantages provided by DB plans. We also encourage clients to discuss the "trends" described by the 2012 Study with their actuary, so as to compare whether and how the new Study's conclusions have any bearing on their plan.

    This memo begins with an overview of the 2012 Study. The second half of the memo addresses the underappreciated lifetime security and retirement income provided by DB plans and what some have described as the failure of the 401 (k) experiment. In summary, the underlying purpose of this memo is to provide a broader and longer term perspective than the Collins Study, that is less hostile to public employee benefits.

    2012 Collins Study
    By way of background, the 2012 Study uses Annual Reports from the Department of Management Services ("OMS") from 2005 to 2011 to answer the following question posed by the Study's authors: whether Florida's municipal pension plans are fundamentally healthy and just need time to weather the current financial storm or have structural problems that require significant repair.

    The Study doesn't justify, explain or define what would constitute a structural problem, Nor does the Study hint at any constructive "structural repairs" to the self-identified problematic trends. With that said, as set forth below, the Study's findings are generally unremarkable for trustees who are familiar with DB plan funding and the undeniable poor investment experience over the past decade.

    More remarkable, however, and potentially suggestive of the Study's agenda, is the concluding sentence that plan costs are "adding insult to injury for many cities struggling to make ends meet." Yet, no mention is made of the hundreds of thousands of Floridians who earned their DB pensions during a lifetime of public service, or the advantages of DB plans compared to their inferior alternatives.

    According to the Study's introductory notes, the LeRoy Collins Institute attempts to report on the ''typical'' pension plan. It uses median values to do so, excluding variations which are deemed to be outliers. The number of outliers excluded from the universe of 492 plans is not identified.

    Interestingly, in comparing plan data from 2001 to 2010, the 2012 Study fails to mention that a not insignificant number of plans were closed during this time period. We understand from the Division of Retirement that at least 67 of the municipal plans in Florida are currently closed to new participants. This fact may skew the Study's results, particularly with regard to the ratio of retirees to active participants. A closed plan, by definition, does not add any new members. Similarly, future payroll growth assumptions are irrelevant for a closed plan with no remaining active members.

    The distinction between open and closed plans is not addressed in the 2012 study. Moreover, the growth of pension contributions, as a percentage of covered payroll, becomes increasingly meaningless in the context of a closed plan. The Study concludes with the following summary of its findings: (i) concerns about underfunded
    municipal pension plans were not caused by the downturn in the stock market, but rather under funding that began before the market fell; (ii) pension contributions have substantially increased from 2005 - 2011; (iii) local governments are picking up more of the pension cost; (iv) the number of retirees is growing and is "outstripping" the growth of active participants; (v) plans tend to overestimate assumed salary growth and investment earnings; (vi) payments for unfunded liabilities represent a growing proportion of annual pension contributions.

    The Study's first finding announces that funding levels have declined nearly every year since 2001.

    According to the Study, "the problems facing many municipal pension plans are long-standing", yet the Study acknowledges that in 2001 the typical municipal plan was nearly 100% funded. In other words, the Study effectively minimizes the downturn in the stock market over the past decade, when the past ten years were book-marked by some of the most severe market dislocations in modem history. It is therefore puzzling why the Study concludes on page 12 by stating that the "underfunding began before the stock market fell." Moreover, the underlying resiliency of the plans' investment portfolios is too easily dismissed by the Study. Favorable market returns for the fiscal
    year that just ended on September 30 are of course omitted.

    The Study compares funding ratios from 2001 to 2010. We remind readers of two bear markets in equities, the bursting of the tech and dot.com bubble, Enron, WorldCom, the9/11 tragedy, two wars, the housing bubble, the subprime mess, the Lehman bankruptcy, the government takeover of Fannie Mae and Freddie Mac, AIG, and the new vocabulary of the Great Recession, the worst recession in seven decades. Indeed, as measured by the S&P 500, the calendar decade studied by the Collins Institute ended with a negative total return. Had an unlucky individual investor bought the S&P 500 on the last day of 1999 @ 1469, on a pure price basis they would have lost 24% as the index closed 2009 at 1115. Including dividends, the S&P lost 10% from January 1, 2000 to December 31, 2009. As a consequence, even well diversified portfolios were not immunefrom losses.

    During this period, many individual investors in defined contribution ("DC") plans have had to postpone retirement as their DC and 401 (k) balances were decimated. By not acting in accordance with a long-term investment policy, too many individual investors reacted emotionally and sold equities during market lows, prior to the current rebound. By contrast, investment decisions in DB plans are made by professional money managers overseen by fiduciaries. As a result, DB plans were regularly investing and rebalancing their portfolios during market downturns. This is one of the reasons why over the long term DB plans consistently outperform their assumed investment rate of return. This also illustrates the wisdom of Florida statutory requirements which mandate payment of actuarially determined contributions on an annual basis. By preventing plan sponsors from taking "funding holidays", DB plans are empowered to stick with their long term investment strategies.

    As for its second and third findings, the Study observes that over the past seven years "local governments are picking up more of the pension costs, especially for public safety plans." "While employee and state contributions are fairly stable," the Study expresses concern that the costs for municipalities are growing. This should not be a surprise, however, in light of the underlying investment and actuarial experience. Trustees understand that increasing employer funding obligations, by design, is what happens in a DB plan when investment risk rests with the plan sponsor. This fact illustrates why the 401(k) experiment is considered by many to be a failure, as
    investment risk lies entirely with the individual investor.

    No surprise for trustees, the Study illustrates the consistency by which Florida municipal DB plans have invested by employing long-term investment strategies. Unlike individual investors, the 2012 Study necessarily concedes that Florida municipal DB plans maintained "a consistent asset allocation strategy" during this challenging market environment and were not "chasing" returns or market timing. The Study describes an unattributed but "widely held concern that pension investors will seek to recover' losses' by shifting to riskier stocks," but the Study's analysis actually provides proof
    to the contrary for Florida municipal DB plans.

    Unlike DB plans, DC plan participants are generally required to reduce their exposure to market risk and thereby lower their expected returns as they age. By contrast, DB plans, through pooling market and longevity risk, are able to invest more cost effectively and obtain better long term investment returns. For any given level of retirement benefits, DB plans are less expensive than DC plans.

    The Study's fourth finding discovers that the number of retirees is growing and is "outstripping" the growth of active participants. In dramatic fashion, the Study is troubled by the fact that payouts may have exceeded contributions in 2010. Yet, actuaries and trustees are generally not concerned, as this merely reflects the maturation of the average DB plan. After all, the purpose for accumulating
    pension assets is not to store them up for perpetuity, but to pay them out. One should not be surprised or necessarily concerned when a pension plan distributes pension benefits.

    Additionally, the Study's analysis is potentially flawed as it does not adjust for the fact that approximately 13% of the plans in the Study are closed and have no new active members. On page 5, the Study attributes the increase in the number of retirees to "several factors, including demographic shifts and concerns that retirement incentives were going to become less generous". Left entirely unmentioned is the downsizing, hiring freezes, and layoffs that have been implemented in recent years. Again, thankfully, many of these retirees have secure income from their DB
    pensions.

    Ironically, to the extent that the Collins Institute or some of its supporters may be seeking to replace DB plans with DC plans, the net result would be to accelerate the replacement of participants with retirees. Actuarial studies have shown that closing a plan is likely to cost more over the short term. Any long-term cost savings of switching to a DC plan are uncertain. We would argue that closing or terminating a DB plan after adverse actuarial experience is analogous to selling out of the market after a major correction. In hindsight, this often turns out to be a regrettable decision.

    The Study's final findings express concern about plans overestimating assumed salary growth and investment earnings. Here too, one might question the Study's analysis. On page 7 the Study stresses the "consistent underestimation" of salary growth during 2004-2007. Less attention is paid to the more pronounced reverse trend in salary data starting in 2008. We understand that the deceleration of wage growth has generally continued into 2012, which will contribute to future actuarial gains. In fact, some actuaries are recommending reductions in the salary assumption as an offset to the
    impact of lowering the investment assumption. Accordingly, the setting of assumptions is a dynamic process which should self-correct over time with actuarial experience.

    As described by the Study, it was "unexpected" that plans did not meet their investment assumptions in 2004 or 2005. We invite the Study's authors to revisit the data. The Study fails to explicitly recognize that plan data is generally reported on a fiscal year basis. on a calendar year basis. Moreover, not all plans submit annual actuarial valuations. Accordingly, greater transparency would result if the Study disclosed how many plans are measured by each statistic. For example, the Study, which relies on the Division of Retirement's Annual Reports, does not disclose that valuations for the plan year ending 2010 were only available for at most 344 plans, not the full universe of 492 plans. Therefore, if the Study exclusively relies on the Division of Retirement's annual reports, at best 70% of the universe was analyzed in 2010 (before removing outliers, which are also not quantified). Making a larger point, we invite the Collins Institute to objectively examine longer term data and trends, without seizing on market turmoil to
    undermine a fundamentally sound and resilient retirement structure.

    http://robertdklausner.com/wp-content/u ... 900631.pdf
    Bumped back into the line

  8. #18
    Guest

    Re: Financial Review Board

    IUPA is the way to go

    Ask Jupiter PD

    Thanks
    Reggie

  9. #19
    Guest

    Re: Financial Review Board

    Where is the actuarial study ? Heard that the City has it and won't release the information. Looks like a need to file a "Freedom of Information Act" soon. They're withholding materially relevant information from the Union. Could it be that the results don't match the presentation put forth before the commission?

  10. #20
    Guest

    Re: Financial Review Board

    Quote Originally Posted by Want to know?
    Where is the actuarial study ? Heard that the City has it and won't release the information. Looks like a need to file a "Freedom of Information Act" soon. They're withholding materially relevant information from the Union. Could it be that the results don't match the presentation put forth before the commission?
    Is it true that the P/F Pensions have been averaging a return of over 8.4% over the last 30 years, inclusive of the Great Recession? If so, I would say that I wouldn't expect a much different return moving forward, would you? Also, I heard that the study found that the fund was only 90 million in unfunded liabilities? Maybe Ken McNamee can explain where he comes up with his 200 million figure?

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