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Middle-Class Families Could Be Retiring Into Poverty
Source: NPPC

 

In a blog post last week, we discussed the fact that many Americans plan to work in retirement just to make ends meet. As we’ve mentioned before, though, many people won’t be able to continue working in retirement and may have to retire earlier than planned. A new report from the Schwartz Center for Economic Policy Analysis (SCEPA) indicates that many middle class families risk falling into poverty in retirement due to inadequate retirement savings.

It’s a well-documented fact that the United States is facing a retirement savings crisis. The simple fact is that many Americans are not saving enough to maintain their standard of living in retirement. Most retirement experts advise that workers should aim to replace 70 to 80 percent of their income in retirement. Most Americans will replace a significant portion of their income with Social Security benefits. However, Social Security is only supposed to serve as a floor to prevent extreme poverty in retirement; it is not supposed to replace the full amount needed for a dignified retirement. Social Security only replaces roughly 40 percent of income on average and that replacement ratio is declining.

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Michael W. Frerichs, Illinois State Treasurer, to be Feature Speaker at the 2018 IPPFA Illinois Pension Conference
Source: IPPFA

Michael W. Frerichs, Illinois State Treasurer, to be Feature Speaker at the 2018 IPPFA Illinois Pension Conference.

 

Michael W. Frerichs

State Illinois Treasurer

Michael Frerichs (FRAYR’-iks) was elected Illinois State Treasurer in November 2014. In Illinois, the Treasurer’s office predates the state’s incorporation in 1818. Voters in 1848 chose to make it an elected office. Frerichs is the 74th person to serve in this role.

In Illinois, the Treasurer is the state’s Chief Investment Officer and Frerichs is a Certified Public Finance Officer. The office invests money on behalf of the state and local units of government. Mike also believes in providing individuals with the tools so that they can invest in themselves.

He does this by encouraging savings plans for college and trade school, increasing financial education among all ages, removing barriers to a secure retirement, and protecting residents from predatory companies.

The Treasurer’s Office actively manages approximately $25 billion. The investment approach is cautious to ensure the preservation of principal. The investment returns are significant: For every $1 spent to run the office, Mike nets $28 for the state’s residents.

Since taking office in 2015, Mike has made significant strides in the fight for consumers by making sure Illinois residents get what is owed to them through the Unclaimed Property Program. A record-breaking $159 million in forgotten cash and stock was returned to individuals, employers, and non-profits in Fiscal Year 2017. By making changes to the Bright Start and Bright Directions College Savings Programs, Mike has lowered fees and provided more investment options, making college more affordable for families saving for their child’s future.

Under Mike’s leadership, Illinois now leads a multi-state alliance that allows parents of children with blindness or a disability to save for their child without jeopardizing their federal disability benefits.  Achieving a Better Life Experience Program (ABLE) is the national standard, offering high-quality and low-cost investment options.

Mike was born in the Downstate farming community of Gifford, Illinois. He graduated from Yale University and spent two years in Taiwan where he taught English to young students and learned to speak Chinese. He returned to Champaign County and launched his own technology business. He was elected to the Champaign County Board and elected Champaign County Auditor. He also served as a volunteer firefighter.

In 2006, Mike was elected Illinois State Senator representing East Central Illinois. As chairman of the Higher Education Committee, Mike championed efforts to make college more affordable. He also served as chairman of the Agriculture and Conservation Committee.

Frerichs currently serves as Vice Chairman of National Association of State Treasurer’s Legislative Committee as well as Trustee on the Illinois State Board of Investment.

Mike lives in Champaign with his young daughter, Ella.


 

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The Real Reason the Investor Class Hates Pensions
Source: The New York Times

No issue in America today better illustrates the divergent interests of working Americans and the 1 percent than pension reform. Substantial empirical evidence shows that America’s favored retirement vehicle — the 401(k), recently renounced by its own inventors — is grossly inadequate and will leave tens of millions of Americans with insufficient retirement assets. And yet states and cities are busy converting traditional pensions into these failing 401(k)s or equivalents, to the great benefit of money managers and the finance class.

Advocates of pension “reform” — which really means cutting or eliminating traditional pension funds — will tell you that such funds are a big drain on state and local budgets, since, as defined-benefit programs, they are obligated to pay workers a defined amount in their retirement. But that’s largely a question of political priorities; underfunded pensions are the result of, well, decades of underfunding pensions. The real reason for the attack on pensions goes deeper, and exposes the great and growing rift between America’s economic elite and everyone else.

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Registration Now Open for IPPFA Retirement Coordinator
Source: IPPFA

IPPFA Retirement Coordinator is now being held NIU Campus, Hoffman Estates, Illinois.

Who in your municipality has all the answers they need? Probably no one. Thats where the IPPFA Retirement Coordinator program comes into play. When trained as a Retirement Coordinator you are the gotoperson.

The Retirement Coordinator can be anyone in the municipality, a department head, union official, pension trustee, HR Director or Finance Director. Having more than one Retirement Coordinator may be beneficial as well.

Not only will the Retirement Coordinator have answers about retirement but in the event of a lineofduty death or injury the Retirement Coordinator will have the information the injured employee or survivors will need to receive the help them to get through a traumatic incident.

The topics covered will include:

• retirement benefits

• taxation of benefits

• post-retirement health insurance

• Social Security

• Medicare and supplemental retirement benefits.

Register NOW

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Retirement Experts to New Government Employees: Think for Yourself
Source: Governing

When pension reform happens, new workers often carry the biggest financial burden. But they don’t always have to.

When politicians talk about pensions, it’s usually about the enormous weight they place on government budgets. According to the Volcker Alliance, where we are consultants, state and local governments are on the hook for $1 trillion in unfunded pension liabilities.

Lawmakers on both sides of the aisle push for pension “reform,” a word often used in a positive sense, to rescue dollars that could instead be used for other services. But what about future retirees? Is pension reform positive for them?

In many cases, not so much.

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Susana A. Mendoza, Illinois Comptroller, to be Feature Speaker at the 2018 IPPFA Illinois Pension Conference
Source: IPPFA

 

Susana A. Mendoza, Illinois Comptroller, to be Feature Speaker at the 2018 IPPFA Illinois Pension Conference

 

Susana A. Mendoza

Illinois Comptroller

Susana A. Mendoza was elected Illinois Comptroller on November 8, 2016. She became the first Hispanic to ever run for and win a statewide office in Illinois as a Democrat.

Prior to her statewide election, she made history by becoming the first woman ever elected as Chicago City Clerk. Under Mendoza’s leadership, more than 1.3 million Chicago City Vehicle Sticker customers were shifted from an inefficient and archaic seasonal sales program to Year-Round Sales. The new system, modeled after the Illinois Secretary of State’s license plate renewal program, resulted in millions of dollars of new revenue and vastly improved customer service at a lower cost to taxpayers. The program was awarded a 2015 “Bright Idea Award” from Harvard University.

As Clerk, Mendoza also took on the puppy mill industry, successfully authoring and passing a City-wide ban on the sale of dogs, cats and rabbits in pet stores unless they are sourced from humane shelters or rescue organizations.

Prior to her service as City Clerk, Mendoza served six terms between 2001 and 2011 as a Democrat in the Illinois House of Representatives. Starting as the youngest member of the 92nd Illinois General Assembly, she quickly earned a reputation as a tenacious and effective legislator, who stood out for her bipartisan approach to governing. Mendoza was routinely recognized for her leadership in the areas of social services, education, law enforcement, job creation and animal welfare.

Mendoza served as Co-Chairperson of the Conference of Women Legislators and has served three times as a delegate to the Democratic National Convention. She is a co-founder of the Illinois Legislative Latino Caucus.

In 2004, Mendoza was named one of Crain’s Chicago Business Magazine’s “40 Under 40” and in 2011 she was highlighted again in the magazine’s “Women to Watch” series. Most recently, she was listed in Chicago Magazine’s March 2016 “Power 50” edition.

Mendoza has been part of the US Department of State’s Professional Speaker’s Program, which aims to promote democracy and leadership across the globe. Through this program she has visited Uganda, Tanzania, Mexico, Peru, Brazil, Venezuela and Chile. She was also Chairman of the Illinois International Trade and Commerce Committee.

In 2010, Mendoza was selected by the National Conference of Women Legislators, at the behest of the US Secretary of State, to serve as one of only seven women representing the United States as an international observer of the Iraqi elections in Baghdad.

As Comptroller, Mendoza plans to bring the same tenacity, passion and creativity that she has always exhibited throughout her career in public service. A tested and proven executive officer, Susana is uniquely qualified to help the State get itself back on track financially in a way that doesn’t put the burden on the backs of the working-class families that make Illinois such a great place to live. She will be an independent, truth-telling, fiscal watchdog that prioritizes both the fiscal and moral health of the State. Mendoza will work to enhance the overall internal control environment of the State to run a more effective, transparent and efficient office. Susana will also work to broker needed fiscal stewardship measures across the Illinois state enterprise and leverage technological advances to make it more efficient and easier to maintain accountable stewardship of and control over funds.

Mendoza lives in Chicago’s Portage Park neighborhood with her husband David and their four-year-old son David Quinten. She is a foodie, a soccer fan (and former collegiate soccer player) and occasionally loves jumping out of perfectly fine airplanes.


 

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Welcome Lazard Asset Management to IPPFA
Source: IPPFA

Welcome Lazard Asset Management to IPPFA.

For decades, we have been managing investment portfolios and providing investment advice to institutional and individual investors around the world.

Lazard Asset Management now operates from 18 cities across 13 countries with a global staff of over 750. Our more than 300 investment personnel manage US $222.4 billion across a wide range of global, regional and country-specific strategies – both traditional and alternative – in listed equity and fixed income.

 

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1.5 Million Retirees Await Congressional Fix for a Pension Time Bomb
Source: The New York Times

WASHINGTON — The sprawling agreement to boost government spending reached by Republicans and Democrats this month quietly included a step toward defusing what could be a financial time bomb for 1.5 million retirees and hundreds of companies in the industrial Midwest and the South.

The deal creates a select congressional committee to craft what could effectively be a federal rescue of as many as 200 so-called “multiemployer” pension plans — in which employers and labor unions band together to provide retirement benefits to employees.

Many of these plans are hurtling toward insolvency in the coming decade, with benefits owed to retirees projected to swamp what the plans can afford to pay. The 16-member, bipartisan committee will have to come up with a solution and legislation by the end of November, which the full Senate would need to vote on by the end of the year.

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Will the Financial Fragility of Retirees Increase?
Source: Center for Retirement Research

The brief’s key findings are:

  • Retirees have long been seen as financially fragile – that is, ill-equipped to handle a financial shock without severe hardship.
  • Interestingly, the research suggests that the vast majority of current retirees can weather shocks such as high medical bills and widowhood.
  • Future retirees, however, face greater risk as most people are not saving enough and it is hard to manage a nest egg.
  • The best responses are to reduce fixed expenses (e.g., downsize) and draw more income from assets (e.g., buy an annuity).

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Kentucky House backing off from switch to DC retirement plans
Source: BenefitsPro

A move proposed by Kentucky’s Republican governor, Matt Bevin, last year to transition the state’s public employees from defined benefit to defined contribution plan appears to be losing support—especially after a controversial e-mail sent by business leaders in the state urged lawmakers to end DB plans.

The Lexington Herald-Leader reports that while no pension bill has yet been introduced in the Kentucky legislature—state workers are already suing retirement system officials and asset management firms over losses sustained by the state’s pension fund—the letter has definitely set teeth on edge.

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