PERS issued an annual report stating Jackson's municipal retirement system is less than 50% funded. The unfunded liability is $62.7 million dollars. The unfunded liability decreased $.7 million from the 2012 report. The retirement account covers police and firefighters hired by the city prior to April 1, 1976. The funding level fell to 48.3% from 48.8% in 2013.
Retirement systems for policeman and firemen were managed by municipalities for decades. Enrollment in these retirement accounts ended in the late 1970's as new employees were enrolled in PERS. The municipalities were given the option of converting these accounts to the PERS system in the 1980s but nearly 20 chose not to do so. The municipalities, not PERS, are responsible for funding these accounts although they are managed by PERS. 2011 post, 2012 post The payments will decrease each year as enrollment was closed and beneficiaries die. The chart on page 58 in the report posted below provides a graph showing the plan will "wind down" in 2030's until it reaches zero.
 |
| Click on chart to expand |
The report states there is only one current city employee enrolled in the system and 630 (-10 from 2013 report) beneficiaries- 439 retired employees and 191 surviving family members. 10 are on disability. The annual benefit to a retiree is $22,573 and $16,014 to a survivor. The total payment in fiscal year 2011 to beneficiaries was $12,871,426. The average age is 73.2 (+1 year from 2013) years old. A member is paid 50% of his average compensation and an additional 1.7% of average compensation for each year of service over twenty years (the maximum level is 66%.). There are 14 fewer beneficiaries than last year but the liability still increased.It should be pointed out this is a closed system. The benefits payments will decrease as the retirees and their beneficiaries pass away. The question is whether the dedicated mills will be enough to cover the payments before the system "zero's out".
The total liability for Jackson is $121,502,067 but the plan has $58,743,067 in assets. The 2013 report stated the plan had a total liability of $124,010,000 and assets of $60,512,000 (p.10). The plan assumes a rate of return of 8.0%.
Jackson faced a similar problem in the mid 1990s. Jackson's plan was below a funding level of 50% from 1991 (38%) to 1996 (46%). The unfunded actuarial liability was $73,861,000 in 1996 and after reaching $80,568,000 in 1994. Jackson issued $50 million in retirement bonds (actually $49.8 million) that were paid off in 2009. The interest cost was $23 million of the bonds. The average interest rate paid on the bonds was 6.3% (not a weighted average) and the average annual principal payment was $4.1 million. The proceeds gained from the sale of the bonds paid the unfunded liability down to $15.8 million in 1997 and improved the funding level to 88%. The plan had a surplus of $6.2 million in 2002 and was funded at 104%. Unfortunately, the funding level has declined since 2004 even when the rate of return was over 10%:
1998: 90%
1999: 98%
2000: 102%
2001: 104%
2002: 94%
2003: 88%
2004: 83%
2005: 76%
2006: 73%
2007: 72%
2008: 70%
2009: 59%
2010: 54%
2011: 52%
2012: 49%
2013: 48%
Jackson dedicates 5.00 mills (slightly over $1 million per mill) to funding the plan. The funds generated by the property taxes were used to retire the bonds.
13 comments:
As long as the general economy and our political system is stable with the addition of capable money management or just indexed management--the PERS environment will be OK.
This is not PERS. Save the talking points for the PERS posts.
I think if we invest more taxpayer dollars via huge new debt loads directly into downtown Jackson that this matter of the unfunded liability will magically sort itself out.
Remember. When something is wrong the solution is always to blow more money downtown.
Not speaking of downtown, per se, but I did notice bulldozers and huge dirt mounds at DUckworth's site in eastover this week. I guess he got his permits.
Taxpayers of Jackson owe its workers over 60 million more that is has to pay them.So one day that will have to be dealt with. Not pay the workers when they retire or pay more in taxes.
I have no claim to any actuarial skills, thank goodness, but if there are just over 500 people drawing retirement, and their average age is 73.2 years old, wouldn't we expect a significant decrease in retirees over the next 5 years? Since the average life span of a Mississippian is 74.8 years old, wouldn't an actuary expect around a 50% reduction in the next couple of years? With only one current non-retiree, wouldn't this plan "wind down" well before 2030? How does PERS determine what the total liability amount is? Serious questions that I know you can answer, KF.
Thats why I keep pointing out its a closed system. I don't think it will mean much for quite some time. The city has dedicated mills to funding the plan. However, when I first started posting about it several years ago, none of the city council members knew about it. Harvey never told them and it was always buried in the budget. They would like to know if there is a $60 million or so unfunded liability floating around. I know I would.
Hey Dorsey! President Epic Fail sends his regards.
But this local underfunding ain't nothing, NOTHING, compared to the financial thermonuke about to radiate your daughter's financial future and that of her generation.
Thanks for all you have done Dorsey to help screw this country up. Enjoy your government healthcare!
Dedicated millage means its on automatic as retirement plans or other financial obligations should be. Our general financial system is based on regular and predictable payments, but anything can happen to disrupt it. That is what the Tea Party worries about. What might make the industrial economies shift from the US dollar to the Saudi dinah?
Kingfish should stick to reporting. He don't know jack shit about investments, retirement systems or money markets. But, as the next poster will remind me, It's HIS blog and he can display his idiocy anytime he likes on his blog.
Yet you never correct me on any actual facts or use them to refute anything. You just say I'm full of _____. In other words, a Precious Martin argument.
touché, 7:43. And KF, you've now coined a new one...I'm having a PMA with someone.... haha
Tell the President that I send my regards as well, 4:06, if you make it to DC after your campaign against Thad.
Post a Comment