Collection of all posts on PERS
The Democrats announced at a press conference yesterday they are opposed to any changes in the Public Employees Retirement System. The Clarion-Ledger reported:
“We are 100 percent united in opposition to any changes in retirement benefits for our state employees,” said state Sen. Hob Bryan, D-Amory.
With a large poster at their side that said “PERS (Public Employees Retirement System) affects all state employees and their families,” Democratic lawmakers at a rally at the Capitol said changes would be unfair to workers recruited using the current retirement plan."
These statements should come as no surprise as their former executive director gave us a preview of what road they would take in a column last week. Clarion-Ledger assignment and "community engagement" editor Sam Hall threatened lawsuits, fire, and other forms of brimstone if the Republicans make any changes to PERS. Mr. Hall opined in a poorly-written column:
"Possibly leading to lawsuits, the proposed bill:
• Freezes the cost of living adjustment (COLA) for three years.
• Ties COLA to the Consumer Price Index, not to exceed 3 percent.
• Employees retiring after July 1, 2013, would not receive any COLA payments until they reached 62 years of age.
• Freezes any COLA payments if the PERS fund fell below 70 percent funded.
• Raises the retirement age to 62 as of July 1, 2013, but would not change the 30 years of service.
• Limits retirement pay for anyone with 30 years of service who retires before age 55.....
This bill is troubling in that it would open up Mississippi to massive lawsuits the state is likely to lose, no matter what kind of judge-shopping the bill’s author has attempted to legislate. You simply cannot enter into a contract with someone and then change the terms of that contract without their consent."
Fairly modest changes but it doesn't matter if the system goes bankrupt as we can't change anything. Mr. Hall continues:
"Additionally, freezing COLA payments when the fund is below 70 percent funded would penalize retirees for market conditions outside their control."
Penalizes? I can hear it now. "Its not their fault? Why should they suffer?" Well Sam, since you are as clueless about finance as you are about politics, I'll spell it out for you. Either you have the money or you don't. If the markets falter, PERS has to withdraw more money out of assets to meet its obligations and the funding level drops even more. The COLA, which is not a true cost of living adjustment but a mandatory pay raise every year, just makes it worse. However, all the retirees shriek is "don't change anything!!!
Well, my Democrat friends and retirees, allow me to inject some reality. Here is the true picture of PERS. Let us start with the funding level. For those of you with ADD or graduates of Nancy Loome schools, here are some nice, pretty charts:
Hob Bryan tells you to ignore that chart as he says funding levels are just "assumptions" and we can "change assumptions". Um, yeah. Why even use assumptions? One thing you should notice about that funding level is it keeps going down even when PERS earns rates of returns over 10%. You won't read about that over at Cottonchicken as he sold his integrity a long time ago. There is a reason why PERS becomes less funded even when it does well in the markets:
Seems to be going in the wrong direction, doesn't it? The retirees reading this post will probably call me a liar or ignore these facts. No surprise there as this is probably the first time they've ever been exposed to the truth. The deficit will continue to get worse as this chart shows the growth in retirees:
As that number grows, the payments will grow. As the payments grow, the deficit will continue to worsen and PERS will become less funded unless the legislature bails it out. What does the Kingfish think the legislature should do about PERS? The Kingfish thinks the Republicans should give the Democrats exactly what they want and do absolutely nothing. Follow the PEER recommendations of doing almost nothing in regards to making changes at PERS.
Let the funding level keep dropping. That is what these Democrats and retirees want: nothing, so give it to them. When the funding level keeps dropping to the point where they are looking at nothing, too damn bad for them. They want to ride the train, let them ride it all the way to the big train wreck. Think you hear gnashing of teeth now? Wait until that happens and they have no choice but to make drastic changes. No court is going to recognize these "contracts" as suicide pacts. Dear Republicans, when the people you are trying to help don't want help, then don't help them. The markets for PERS are up around 5% and the new employer contributions yielded some more money for PERS but I predict the funding level will decrease again when the annual report is issued in October. However, let Sam Hall, Hob Bryan, and the retirees ignore reality and give them what they want.
Post on 2012 annual report
3-year rolling average: 13.23% (Funding level still fell.
5-year rolling average: 2.42%
10-year rolling average: 6.96
Rates of return since 2000:
One little idea: Instead of allowing PEER to examine PERS, why doesn't the Legislature order the Securities Division at the Secretary of State to audit and examine PERS since it has true examiners with investments backgrounds on its staff.