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FPPTA

January 2011

Florida Public Pension Trustees Association P r o v i d i n g t r u s t e e e d u c at i o n a n d i n d u s t r y i n f o r m at i o n i n a n e f f o r t t o p r o t e c t defined benefit plans.

Message from the CEO Raymond T. Edmondson, Jr. I hope you all had a happy, healthy and safe holiday season. Let’s remember those among us who didn’t in our thoughts and prayers. A New Year confronts us with new issues and new ideas. The FPPTA is constantly improving services to our members without increasing fees.

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In 2011 we will see the eligibility of baby-boomers to retire, 10,000 per day. Most will not be able to retire due to the collapse of their defined contribution accounts, such as 401(k)s. This means

No new entry into the workplace of younger employees and college graduates; A stagnation of the work force; Higher unemployment and government assistance, along with higher crime rates; The devaluation of the dollar; The highest foreclosure rates in history on homes, due to the balloon and adjustable rates mortgages being increased and coming due; Unsustainable national debt.

Now let’s look at the State of Florida. It’s doing pretty well. So how can we mess it up? Let’s call it “Pension Reform”. I am always very leery when anyone labels a process as “reform”. I remember “court reform”, “education reform”, and “tax reform”. Remember them? I think politicians’ attempt to fix something that isn’t broken is dangerous, because they can’t fix something that is not broken, they can only meddle with it. Legislators arrive in Tallahassee with a predetermined mind set, and then create committees and subcommittees to substantiate their preconceived notions. If the committee takes testimony that disproves their objectives, they sometimes ignore that testimony, or they don’t make public the findings. So in this case, the preconceived idea is to destroy the defined benefit pension systems that have proven to be the least expensive system to provide pension security for the past 150 years. Defined benefit pensions support economic growth by returning 40% of each benefits paid dollar back into the state’s economy. Instead, some politicians want to replace this successful system with a defined contribution program that has been proven to be “not a reliable vehicle for retirement.”

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Remember, municipal pension systems are autonomous trust funds that politicians can’t touch. Defined contribution accounts are not trust funds. Defined benefit systems provide retirement security, disability benefits, death benefits and survivorship benefits. A defined contribution account doesn’t. Coverage for these other benefits must be purchased from other sources. Now follow the money. It may come as a surprise that a few legislators who are pushing for state and municipal pension plans to be converted to defined contribution type programs actually sell them. Out of the total number of Florida Legislators that number is slight, but still there. The point is, we need to make sure the public and the press know there are factors driving these proposed changes that aren’t always as pure or simple as they are made to seem. Most legislators I have spoken with about the pension issue have never heard the positive side of the defined benefit system, such as the low cost to taxpayers for operating defined benefit pensions, and the gains they provide to the economy. I do think we are making a difference in the battle to preserve the public sector defined benefit public pension systems, but we have our work cut out for us. In 2011, the FPPTA will work hard to educate lawmakers and local elected officials about the real and great strengths of this system.

Raymond Edmondson, Jr., CPPT, CEO Florida Public Pension Trustees Association

NEARLY HALF OF AMERICANS AGES 45-70 HAVE NO PLANS TO PROTECT THEMSELVES AGAINST OUTLIVING ASSETS OR THE RISING COST OF HEALTHCARE IN LATER LIFE Nearly half (48 percent) of Americans ages 45-70 have no financial plans in place to protect themselves against outliving their assets and the rising cost of healthcare should they live longer than they expected, according to a new survey released today by the Society of Actuaries (SOA). Additional findings show more than one-third are worried about running out of money during retirement, but only 20 percent plan to purchase an annuity or other form of guaranteed lifetime income to protect their assets.

*Click on the title to view the entire article

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Message from the COO

Kimberlie Ryals, Chief Operating Officer Happy New Year! 2010 was a great year for the FPPTA and we look to extend that success to 2011. It is important to renew your FPPTA membership for the new year if you have not already. The organization has expanded its role in the public pension world and also the services we offer our membership. Please follow the appropriate link below to renew membership. We are gearing up for the January Trustees School. Judging by registration, the school promises to be well attended. We have a great program lined up and look forward to seeing everyone in St. Augustine. For more information on the Trustees School please visit the FPPTA website: www.fppta.org. We are also looking forward to our Annual Wall Street Program in New York. Outside of our conferences, our communications initiatives continue to expand. The FPPTA will be unveiling “Pension Talk,” an FPPTA blog designed to promote and educate our members and the public about the benefits of defined benefit plans. Sue Marden, our Public Relations Consultant has more information pertaining to our plans with “Pension Talk.” I’d just like to reemphasize how pleased our organization is in all its achievements in 2010. Here’s to another great year! Sincerely,

Kimberlie Ryals, Chief Operating Officer Florida Public Pension Trustees Association

FPPTA 2011 MEMBERSHIP Please complete your 2011 membership renewal. Renewal is easy and can be completed on the FPPTA website in just a few minutes. Please visit the appropriate membership page below: Associate/Service Provider Pension Board Individual Retiree Program

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FPPTA Launches Blog: “Pension Talk” will be the new public forum Susan Marden ,

Public Relations Consultant

The FPPTA “Pension Talk” Blog will make its debut on our home page in the near future. We hope to use the blog to generate interactive discussion that will be enlightening and educational, especially for people visiting our web site looking for information about defined benefit public pension plans. Our 2011 focus on education makes the FPPTA Blog a must-have tool for media outreach and interactive member support. Our blog will include news stories from around the state, along with our responding commentary; op-ed columns that have been published in major daily papers, as well as new columns developed just for this post. It will offer tutorials and news about actuarial and financial trends, but primarily it will present opinions about news-making subjects like pension reform proposals, the elimination of DB plans, shifts toward defined contribution plans, employee participation, and collective bargaining demands or concessions. There will be a new blog entry posted each week. Bloggers writing under the FPPTA banner will include FPPTA executives and Board of Director members, professional accountants, actuarial and legal consultants, among others. Only FPPTA members or sponsors will be permitted to comment on the blog via e-mail posts during an initial trial period. All posts must be submitted by e-mail to www.fppta.org. They will be reviewed and posted within 24 hours. The FPPTA reserves the right to edit or reject posts because of inflammatory language, obscenity, or threats of any kind. We hope you will visit the site and check regularly for the “Pension Talk” Blog where an exchange of opinions and ideas can help further the cause of protecting defined benefit pubic pensions.

Faces of Florida...real people, real stories

Linda Loizzo Chief of Police, North Miami Beach, retired.

Emery Hampton Riviera Beach Water & Utilities Department

Susy Pita Key West Power Company, retired

Greg Warner Avon Park Police, retired

The FPPTA is gathering testimonials that portray the real-life experiences of Florida’s public employees. It is designed to reveal the real people behind the public discussion about public employee benefits, and to strengthen the case for defined benefit pensions. The campaign is called “Faces of Florida….real people, real stories”, and we plan to share it with legislators, the news media, elected officials and the public. The FPPTA will begin highlighting a new set of interviews in each edition of the E-newsletter. Faces of Florida: http://fppta.org/FOF/FOF.aspx

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News Clips Fred Nesbitt, Media Consultant Police seek public’s support for pension funds By William Kelly, Palm Beach News, December 25, 2010 The town’s police officers are appealing to the public for help in their fight to protect their pensions from deep cuts proposed by the town. The Fraternal Order of Police took out a half-page advertisement in Wednesday’s Palm Beach Daily News. “Our concern is if they lessen the pension and rein in the benefits that all other municipalities in Palm Beach County and South Florida give their officers, they are going to have a problem with recruitment, retention and, eventually, quality of service.” Town Manager Peter Elwell presented a plan that would slice the cost of pensions for police, firefighters and general employees by about half over 10 years. He has said current pension levels are not sustainable because of escalating costs that threaten to drive the town budget into a string of deficits starting in 2012. According to the police ad, the average police officer’s pension would fall from $56,263, which is the average over the past 10 years, to $20,094 under the town’s plan. Officers also would lose survivor benefits and 2 percent cost-of-living increases for their pensions, the ad points out. Nationwide pension troubles may affect local landscape By Tony Holt, Hernando Today, December 24, 2010 “The pension system in Florida is still a very stable system,” said Spring Hill Fire Chief Mike Rampino. He said he remains aware lawmakers are looking closer at pension programs and may see it as a fertile place to make cuts. Mostly all government employees, state and local, are part of the Florida Retirement System. Gov.-elect Rick Scott already has vowed to cut more than $1 billion from the state’s pension fund. The public’s perception of government pensions also seem to be changing. Millions of people employed in the private sector have seen their 401(k) plans ravaged, frozen or cashed out. They might be less inclined to empathize with their government counterparts. At the very least, Scott has vowed to make government employees contribute more to their pensions. Morning Bell: Stop the State Bailouts Before They Start Heritage Foundation, December 28, 2010 Reforming how police and fire workers are paid is an uphill climb politically, but polling shows that once voters are educated, they are open to change. A recent poll by the Florida League of Cities on Police and Fire Benefits found that, initially, most respondents did believe police and fire benefits were “about right” or “too low.” But when told that police officers and firefighters can retire after 20 years of service and receive 80 percent of their salaries for the rest of their lives, 66 percent of respondents strongly opposed this policy. And when asked if they knew that the retirement pay for an average police officer was over $70,000 per year, 71 percent said that was too high.

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*Click on a title to view the entire article


Scott may shrink tax money for public employees’ pensions By Gary Fineout. Ocala Star-Banner, December 11, 2010 Scott wants to cut $1.4 billion next year from taxpayer contributions to the public employee pension program, and many legislators have signaled their support for the notion. Such a move would, for the first time since 1975, force teachers, firefighters, sheriff’s deputies and other government employees to make significant contributions out of their own salaries. Florida is one of only a handful of states in the nation that don’t require employees to pay for their pensions. Scott is not expected to offer a specific plan for changing the state pension program until early 2011. But it is clear that he sees the retirement fund as one way to cut spending and help make up for the $1.4 billion cut he wants to make in state property taxes for schools and $700 million more in the corporate income tax. Florida lawmakers weigh changing employee health, pension accounts By Mary Ellen Klas, Miami Herald, December 9, 2010 Among the options consider as part of pension reform: • Giving state employees health savings accounts and high-deductible plans that would require people to be more responsible for their health, and to shop around for the most cost-efficient healthcare. • Phasing out defined benefit retirement programs for new employees and provide incentives for existing workers to shift into 401K-style defined contribution programs. • Requiring state workers to work longer than the current six years to become vested in the defined contribution plan. • Requiring all government workers to pay a portion of their retirement benefits. Currently, most employees don’t have to pay into the state retirement system. Florida League of Cities Poll on Police and Fire Salaries Shows Public out of Touch Regarding Benefits By Mike Shedlock, FavStocks.com, December 23, 2010 An Poll by the Florida League of Cities on Police and Fire Benefits shows the public is way out of touch with how generous police and fire benefits are. When asked if benefits were too high, most thought no. When given actual benefit levels most thought the opposite. When it comes to the pay and benefits of police and fire fighters, voters are generally unaware of the array of benefits currently afforded them. Initially and by a large margin most respondents felt these benefits are “about right” or “too low”. Almost without exception, voters feel that most of these benefits are too generous.

HB 303 - PUBLIC RETIREMENT PLANS Public Retirement Plans: Limits benefits available under public retirement systems or plans; revises definitions relating to compensation; limits factoring of overtime, unused leave, & other such compensation into pension benefit; reduces service credit prospectively; revises applicability of ch. 175, F.S., to firefighters who are eligible for FRS; revises applicability of ch. 185, F.S., to police officers who are eligible for FRS; provides membership requirements for special fire control district & municipality board of trustees; revises powers & duties of boards of trustees, special fire control districts, & municipalities; revises provisions relating to firefighter & police officer benefits; repeals provisions relating to presumption with respect to diseases of firefighters suffered in line of duty; repeals provisions relating to transfer to another state retirement system & payment of benefits; repeals provisions relating to presumption with respect to police officer disability in line of duty; provides declaration of important state interest.

*Click on a title to view the entire article

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State Legislative Update Randy Touchton, State Legislative Consultant The week of January 10th through the 14th was a very busy week for the discussion of pension reform. Once again, Senator Jeremy Ring was quoted as stating that “Reform is coming” and “Now, in terms of what reform looks like, that remains to be seen”. Beginning on Monday the AFL-CIO held a press conference at the press center, to counter the myths, as they described them, that have surfaced regarding the catastrophic status of the public pension system. Presenting along with the union, was our FPPTA CEO-President Ray Edmondson and Chad Little. Ray’s comments were widely carried in several newspapers and on several television stations statewide. According to our President, one of the most asked questions was what affiliation did the FPPTA have with the union and was the association (FPPTA) being compensated by the union for his appearance. We all know the answers to those questions. NOT and NOTHING. It was a great opportunity to offer a voice of advocacy for “defined benefit plans” and Ray did an outstanding job. The Senate Governmental Oversight and Accountability Committee met on Wednesday and the Florida Professional Firefighters Association, the Police Benevolent Association, and the Florida Education Association were invited to testify or present to the committee. The FPF indicated that; the average retirement benefit for a special risk member was $23,854, they were opposed to new employees being placed in a 401 k plan, most overtime was mandatory and was a decision made by management, and that the local pension plan issues should be handled on the local level rather than by the state legislature, and they were willing to work the members of the committee. The PBA indicated that; changes should be made thru the collective bargaining or negotiation process, law enforcement benefits had been reduced based on the economy and budget shortfalls without legislative directive, and they were willing to work with the members of the committee.

All of the groups refuted the information or data that has been provided by the Florida League of Cities. In addition, they likewise reminded the members that when a retirement plan surplus existed both on the state and local levels, that those surplus dollars were used by the legislative bodies to reduce the employer contributions to their respective retirement plans or for other purposes. At the end of this meeting, Chairman Jeremy Ring indicated that an actual pension reform bill would probably be put forth in about a month. He once again, urged the groups to be partners as the legislation was being formulated. The Senate Governmental Oversight and Accountability Committee will be meeting again on January 26th. The Florida League of Cities has been invited back for cross examination, the American Federation of State, County, and Municipal Employees, and the Florida Division of Retirement will likewise present. The full House Appropriations Committee met on Thursday, and was provided a very comprehensive overview of the Florida Retirement System by Policy Director Heather Williamson. There was discussion and questions, however, as directed by Chairperson Grimsley, those inquiries were purely for clarification or informational purposes only. According to the Chairperson, this was simply an opportunity to acquaint and educate the members on an issue that will be subsequently forthcoming. Interestingly, there was no presentation or mention of the local pension plans. The James Madison Institute has now joined the long list of associations or organizations which have joined into the pension reform discussion. The institute has just published and released a 26 page document entitled “Protecting Florida’s Cities Through Pension Reform”. The report can be accessed at www.jamesmadison.org, and I would encourage your review. In short, their solution is putting on new employees into a defined contribution or 401 k plan. I think we have heard that suggestion or solution many times before.

As of this writing, the only retirement bill that has been filed is The FEA indicated that; the average pension benefit for a teach- Senate Bill 442 by Senator Hill. The bill would expand special er was $22,400 or approximately $1800 monthly, after taxes and risk designation to members employed in acute care hospitals the cost of health insurance benefits (between $500 and $1,000) serving certain clients. not much remained in covering other living expenses, and they strongly supported protecting the current benefits and compensation of retirees and fully vested employees.

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FPPTA TRUSTEES’ CORNER ASK QUESTIONS, GET ANSWERS

The FPPTA encourages our members to reach out to us in times of need or curiosity. Does your board have an issue or question the FPPTA can help with? Please let us know. The FPPTA Trustees’ Corner is a new feature to the E-Newsletter in which we answer questions and offer advice to our membership. Trustees are encouraged to submit questions or ask for advice from the FPPTA. We are currently accepting submissions. The FPPTA will then consult with the appropriate professionals from our associate membership to come to a suggestion or solution. Your question and answer will then be featured in the FPPTA E-newsletter so other members can benefit from your experience and be better prepared should a similar situation arise for their board of trustees. To participate please send an email to fppta@fppta.org. The FPPTA respects the privacy of its members. If you would like to submit a question but prefer not to be identified just let us know.

FPPTA 2011 MEMBERSHIP Please complete your 2011 membership renewal. Renewal is easy and can be completed on the FPPTA website in just a few minutes. Please visit the appropriate membership page below: Associate/Service Provider Pension Board Individual Retiree Program

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Board of Directors

Pete Prior, CPPT Chairman

Steve Aspinall, CPPT Treasurer

Joe Liguori, CPPT Director

George Farrell, CPPT Vice Chairman

Brenda Clanton, CPPT Director

Renee Lipton, CPPT Director Emeritus

Ann Thompson, CPPT Secretary

Gary Clark, CPPT Director

Ken Harrison, CPPT Director Emeritus

FPPTA Staff

Ray Edmondson , CPPT Chief Executive Officer ray@fppta.org

Kim Ryals , CPPT Chief Operating Officer CPPT Coordinator kim@fppta.org

Lois Edmondson Senior Executive Assistant Membership and Event Registration Specialist Lois@fppta.org

Peter Hapgood , CPPT Education Consultant Peterhapgood@fppta.org

Fred Nesbitt, PhD FPPTA Media Consultant fnesbitt911@gmail.com

Susan Marden Public Relations Consultant smard2@verizon.net

Randy Touchton State Legislative Consultant randyt@nettally.com


FPPTA Education Committee Peter Hapgood, CPPT, Chairperson FPPTA Education Consultant

Joe Liguori, CPPT, Director Delray Beach Police & Fire Pension Fund

Tim Olsen, CPPT Melbourne Fire Pension Fund

Ray Edmondson, CPPT FPPTA Chief Executive Officer

Ann Thompson, CPPT, Board Secretary Vero Beach Police Pension Fund

Mike Spencer, CPPT RBC Global Asset Management

Kimberlie E. Ryals, CPPT FPPTA Chief Operating Officer

Dennis Hole, CPPT Ft. Lauderdale Police & Fire Pension Fund

Jack Farland, CPPT Public Pensions, Inc.

Pete Prior, CPPT, Chairperson Hialeah Gardens Police Pension Fund

Steve Corbet, CPPT St. Petersburg Police Pension Fund

Grant McMurry, CPPT ICC Capital Management

Steve Aspinall, CPPT, Board Treasurer St. Petersburg Police Officers Pension Fund

Richard Grover, CPPT Pensacola Firefighters Pension Fund

Katie Byrne, CPPT DePrince, Race & Zollo

FPPTA Advisory Board Howard Bos, CPPT, Chairperson Richmond Capital Management

Grant McMurry, CPPT ICC Capital Management

Mary McTague Atlanta Capital Management

W.O. Bell, Vice-Chairperson Westwood Distributors

Tracy Musser Thompson, Siegel & Walmsley, Inc.

Chris Greco Sawgrass Asset Management

Brad Rinsem, Secretary Salem Trust

Joe White Saxena White, PA

Bob Podgorny Dow Jones Indexes

Michael Spencer, CPPT RBC Global Asset Management

Katie Byrne, CPPT DePrince, Race & Zollo

Tom Franzese Lazard Asset Management

Bruce Feiner, CPPT ConvergEx Group

Tom Capobianco Lee Munder Capital

Richelle Hayes, CPPT American Realty Advisors

Janna Hamilton, CPPT Garcia Hamilton & Associates

Chad Little Freiman Little Actuaries

Alison Bieler Cypen & Cypen

Joe Bogdahn The Bogdahn Group

Jerry Navarette The Boston Company

Allison Corbally State Street Global Advisors

Michael Smith JP Morgan

FPPTA

2946 Wellington Circle East Tallahassee, FL 32309 Phone: 800-842-4064 Fax: 850-668-8514 E-mail: fppta@fppta.org www.fppta.org


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