Note: Apologies to readers for running several months late with this post.
Collection of all PERS posts.
The story of the Mississippi Public Employees Retirement System in 2017 was actually one number- 102 as in 102,260 retirees. 2017 was the first year that the number of PERS retirees went over 100,000. The result is the deficit between contributions and payments increased slightly even though PERS enjoyed a rate of return of 15%. Thus PERS stayed stuck at a 61% funding level despite enjoying stellar returns in the market.
The numbers don't lie as the chart posted below shows the basic problem PERS faces. The number of retirees have increased 45% in ten years without a single decline in any year. The number of retirees was only 56,000 fifteen years ago.
As payments increase, contributions have failed to keep pace. The number of contributing employees fell by roughly two thousand. The contributions from employees and employers in 2017 was $1.589 billion - a decrease of $4.7 million. However, PERS paid $2.592 billion to beneficiaries - an increase of $110 million, thus creating a deficit of $1.003 billion. This is the first time that the deficit has been more than $1 billion. The deficit is a black hole for PERS as it sucks up more and more funds even when PERS has a great year of investments as it did in 2017. The scary feature of this retiree growth is that PERS caught a little bit of a break as the increase was less than the usual three thousand retirees. The financial picture of PERS would be worse if retiree growth had been average.
The money to cover the deficit can only come from investment income and selling assets. The deficit has grown every year since 2000. It more than doubled in only seven years - the year the Capitol echoed with a chorus of shrieks when Governor Barbour appointed a commission to review PERS.
Thus the funding level continues to stay stuck in the mud as shown by these two charts. PERS defenders have said that the funding level would improve "once the markets recovered." Unfortunately for PERS, the markets recovered years ago but PERS fortunes failed to do so as the growth in retirees torpedoed its balance sheets.
The unfunded liabilities fell all of $10 million in 2017 ($16.812 billion to $16.802 billion) despite the 15% return in the markets.
A funding level of 80% is considered to be the minimum level for a well-funded public employees retirement program. The problem PERS faces are structural in nature as stated earlier. The number of retirees continues to grow. The contributions are not enough to keep up with the benefits payments. Everyone is happy when PERS enjoys a double digit return in the markets but it is unreasonable to expect that to happen on a regular basis. Mississippi had the tenth worst-funded public employees retirement system in America in 2016 yet no one in Mississippi wants to even discuss PERS.
JJ wrote in 2016:
The problems for PERS began in 1999 when Tim Ford and his crew decided to increase benefits without, as PERS Executive Director Pat Robertson used to say, finding a way to pay for them. The stock market would give us double-digit returns forever. PERS would always be a land of milk and honey for retirees. Easy enough to do when the number of retirees is around 50,000, not so easy when they are over 100,000. However, no one wants to discuss PERS. Its easier to make a two degree course correction 50 miles away from an iceberg than it is to turn 90 degrees when the iceberg is in front of one's face. However, this is Mississippi where we push off all problems to tomorrow and like our reality to be filled with sand as we bury our heads in it.A $26 billion portfolio means PERS is the largest pile of money in Mississippi yet it is virtually ignored by the politicians and the media. PERS obviously has enough money to pay its bills for quite some time - no one has said otherwise. However, PERS stays stuck in neutral despite its best efforts.
Other PERS notes:
Rates of Return
Bonds: 2.39%
Domestic Stocks: 19%
International Stocks: 22.3%
Global Equities: 20.25%
Real Estate: 6.76%
Private Equity: 20.12%
Net Investment Income: $3.4 billion ($131 million in 2016)
Amortization Period: 38.4 years (36.6 years in 2016)
**Here are the market returns for PERS since 2000:
2000: 8.4%
2001: -7.1%
2002: -6.6%
2003: 3.5%
2004: 14.6%
2005: 9.8%
2006: 10.7%
2007: 18.9%
2008: -8.2%
2009: -19.4%
2010: 14.1%
2011: 25%
2012: 0.6%
2013: 13.4%
2014: 18.3%
2015: 3.5%
2016: 1.16%
2017: 15%
Average Return since 2000: 6.42%
5-Year Return: 10.27%
Assumed Rate of Return: 7.75%
24 comments:
i. am. so. tired. of. PERS. stories.
It’s a multi billion dollar burden on the state @8:46– and a Ponzi scheme at best.
The answer is simple and will please JJ to no end. Pay all these bastards minimum wage plus 15%, give them $120 a month at retirement, strip the so-called thirteenth check, abolish the option to provide for a spouse at death and shoot any state employee or retiree who bitches about these changes.
These people are the scum of the earth and smell bad and should not be associated with or allowed to walk around among the general population. Since they are not working in the private sector, their IQ falls between 68 and 101 anyway. None of them goes to church and if you drive by their houses you will see unkempt property and junk everywhere. They work 5.5 hour days and sleep at their desk or while leaning on their shovel.
As has been pointed out here, only 2% of them know how to balance a checkbook and you'd have to search high and low to find one who has a savings of over forty dollars.
Enough of all these experts whining and suggesting various corrections methods. Just implement my plan and all this will correct immediately.
The financial health of PERS should be a top issue for The Parents’ Campaign and Jay Hughes. Have either provided any proposals? It’s easy to say “it’s ALL about education” but much more difficult to address a political hot potato like PERS.
8:46, you should cancel your subscription to JJ since you don't like the content.
another PERS story = slow news day.
9:26 needs some love. Group hug everyone to 9:26. . . Everything's going to be alright.
It seems to me that retirees are not the problem with PERS; they are the sole purpose for PERS's existence. I suspect the real problem is something more along the lines of incompetence, pocket-lining, and plain old not-giving-a-shit.
Those of you who think PERS is boring, just wait until it blows up, goes into receivership, and Mississippi's credit rating gets downgraded to JUNK.
Not so boring, then.
Well, Kilt, at least you've moved on from beating up on women who rescue dogs trapped in storm drains. Classy.
The answer / end result is painful but retirees will be the ones who feel the pinch.
If you work for the state now, plan to retire within 10 years, and you think your retirement is “safe” you are deluding yourself.
Demand that more workers be hired and more money be withdrawn from your pay. Demand that recipients give some and voluntarily forfeit a percentage of benefits a year.
Working together the difficult solution can be achieved....but....reason has no place here
I think its unfair to blame the state employees. They are operating within a system that is itself broken and rewards greed. I know many state employees (UMMC) who retire, take their PERS pension, and then go back to work as a consultant, oftentimes doubling their salary. Its ridiculous. But its PERS, baby.
Anyone who believes teachers or state employees are underpaid, don't understand the benefits of PERS. Work 25, draw retirement (and work yet another job) for 30. The world's biggest Ponzi scheme and it is taxpayer funded so it will never fail.
World and biggest ponzi? That would be social security. They don’t even pretend to tie contributions to ultimate benefits.
1151 - don't blame the employees and the retirees! BS.
They are the ones whow flex their voting power to:
1) stop any change to the governing board, which consists of people drawing ftom the trough, or planning their life,around drawing from the trough;
2) scream and shout about any change to the system - i.e. moving to defined comp vs defined benefit like most every other pension system in the country has done (non-government). Hell, evendors the federal government made this change 40 years ago bit our legislators are,afraid of the voting block of all these state workers who know a,sweetheart deal when they are sucking on the tit
3) they are the ones who master the rules -not for good governance but for Pocket lining. Work 20 at anything. Get a fI'll time high pay for four, retire in great lifestyle AND get a Christmas bonus compounding at 3% in a stagnant economy. (BTW, it's that compounding that they slid in that makes the 13th check such a crime against humanity)
And I am a son of a beneficiary that would scream and holler with the rest of them if you touched her 13th present.
I have about a 20 percent gain for the year in my E*Trade portfolio. Maybe "they" should move me from JPS to PERS. It's not like JPS is using me appropriately anyway.
Is it average rate of return or compound annual growth rate you are listing. They can be _VERY_ different figures.
115.66%/18 periods is an average of 6.43%. However, a more useful number is 5.81% CAGR. As an aside.... this is a way that people can be, and are often, misled about investment returns.
Pension funds are required to hold certain amounts in bond funds. If you got 20%+ returns in your brokerage/401k/IRA you more than likely are heavily allocated into equities.
Since when is posting a different opinion 'beating up' on someone? If your post speaks admiringly of Kingfish or amen's his theory or opinion, you are assured it will appear here. If not, you have a 50-50 chance. At best.
When a blog starts losing the black crowd and the skirt crowd, the owner will do whatever he can to snatch them back into the fold. lol.
"8:46, you should cancel your subscription to JJ since you don't like the content."
How do you figure one SUBSCRIBED to JJ? And since when does one have to be 'classy' to post on this here blog? All you gotta do is send money, take out a paid ad or stroke the owner.
Oh yes, its our friend who freaks out whenever someone says a kind word about this website, so threatened he is. He is taking a break from beating up on older women who rescue puppy dogs trapped in storm drains. He needs to go back to worrying about people in Jackson coming to Madison to shop.
Your personal animus is showing Kingfish. You shouldn't be so thin-skinned.
"Beating up on old women who rescue puppy dogs in storm drains"? Is that an emotional fallacy aimed at gaining sympathy?
Put on your big boy britches.
I can't afford an add but will send a money order if I don't have to sign it.
Just a quick review of threads appearing currently on the blog:
PERS needs money.
The South will go broke under Trump tariffs.
Blue Cross battles UMMC over money.
MO $$ for the children.
Please send money to JJ.
States authorized to collect on-line tax money.
MO money via JPS tax collections.
JPS 5 mil bond money.
ERRY-BADDY NEED MO, WANT MO, GET MO!
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