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My pension is 73% funded
Old 10-01-2017, 05:51 PM   #1
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My pension is 73% funded

and from a county govt agency. How safe would you say that is?
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Old 10-01-2017, 06:17 PM   #2
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73% safe? Probably better than a lot of government funding. The benefits many governments have agree to are beyond their ability to pay. I will say though that even in Detroit and in Wayne county (one bankrupt and the other very close to emergency management), there is a strong focus on doing the right thing with people's pensions. The bigger risk is retiree healthcare. They seem to be more willing to walk away from that.
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Old 10-01-2017, 06:30 PM   #3
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I would look at the county's bond rating and specifically has it improved or declined over the years. The number 73 wouldn't worry me if the bond rating is stable or improving and the local economy is good. Not much you can do about it except maybe use more conservative AA for your other retirement funds.
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Old 10-01-2017, 06:49 PM   #4
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Originally Posted by TrophyWife View Post
and from a county govt agency. How safe would you say that is?
Google Loyalton, Calif vs calpers, drink a glass of wine before you start.

Someone way smarter than me said to view my pension as 1 leg of the stool, my savings as another and soc sec as the 3rd. BTW, I love this idea.

If all 3 collapse, my stool has 4 legs, I can go back to work tomorrow, plenty of blue collar jobs out there for me.

Update, I was giving you worse case scenario, I think your fine. How many folks retire without a clue of the pensions funding percent. Keep a little powder dry for an emergency.
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Old 10-01-2017, 08:04 PM   #5
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Thankfully we are not part of the calpers system. I'm just not sure how to evaluate what we have.

is this what I should be looking at as far as bond rating?
Issuer/ Default Rating AA+ Aa1 AA+

or maybe this
1997A Refunding Pension Obligation Bonds WD/AA A3/Aa1 A/NR
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Old 10-01-2017, 08:55 PM   #6
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Thankfully we are not part of the calpers system. I'm just not sure how to evaluate what we have.

is this what I should be looking at as far as bond rating?
Issuer/ Default Rating AA+ Aa1 AA+

or maybe this
1997A Refunding Pension Obligation Bonds WD/AA A3/Aa1 A/NR
Those are the ratings I referred to. I'm not crazy about pension obligation bonds but would be interested in what the more knowledgeable members have to say. AA is a good rating if it's for general obligation bonds.
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Old 10-01-2017, 11:05 PM   #7
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One of the problems with answering your question is....

Based on what

The major item I would be worried about is expected return... you read where some are as high as 8.5%.... the other is demographics.... are they calculating what people will be getting and how many correctly...

Here is a paper on what these mean and might have yours included...

From what I have read, 73% of OK, but not good... and far from great...




http://www.nasra.org/files/Issue%20B...sumptBrief.pdf
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Old 10-03-2017, 09:04 AM   #8
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How safe it is could depend on how old you are, how close to retirement you are, etc.

There are two threats. The first is that the pension plan could be amended and those changes could impact you depending on how far you are from retirement.
Things like the number of years service to take full pension, or the nature of any post retirement benefits attached to the the pension. Could also be changes in the COLA fomula if you have a pension with this attribute. There could also be a switch from DB to DC going forward as my employer did. Fortunately I had enough service and age to be grandfathered and remained in the DB group.

My guess is that if you are retired you are probably OK.
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Old 10-05-2017, 06:30 PM   #9
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TW,

If the pension plan is a California county stand alone plan (not CalPERS), then it is probably a "37 Act" Plan - and if the pension is the result of County service, then California law requires the County pay for pension obligations before all other obligations. So as far as safe, it's probably as safe as it can be as a local government pension.

I think the guidance above to look at the assumed earnings rate used by the Plan Association/County to determine annual contributions to the Plan as a measure of safety is a good one. If the County is still using 8.0% or 8.5%, then you might see the 73% go even lower. If the County is using 7% or even 6.5%, then that means they're making larger contributions to the Plan and if the markets continue to perform reasonably well, the funding level could increase.

Also noted above, 73% is less worrisome if the County's finances remain strong. If the County's finances are in trouble...that's a concern. The continued health of the Plan is contingent on receipt of contributions from the County and its employees.

NL
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Old 10-05-2017, 07:31 PM   #10
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Be thankful that your pension fund is not like the Chicago Teacher Pension Fund.
Bad news for homeowners: Chicago teachers' pension liability may be much larger than expected | Chicago City Wire
Chicago teachers don't pay into and are not recipients of Social Security. The fund is currently rated as under 50% funded... and that only by the full faith and trust of the city of Chicago... itself sustained only by very high risk loans.
The total unfunded liabilities for all government pensions in Illinois is currently over 204 billion dollars.

I think that currently general acceptable pension funding is about 80%.
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Old 10-05-2017, 08:33 PM   #11
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Note based upon annual reports I think most corporations fund their pension plans at 80% (so lump sums are possible), and put the remainder as a misc liablity on their balance sheet. The megacorp I used to work for does this.
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Old 10-05-2017, 08:42 PM   #12
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One (and only one) of the reasons I took a lump sum when I retired. One more thing I don't need to worry about now.
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Old 10-05-2017, 09:47 PM   #13
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I think you will be fine.

As I mentioned a few years ago, most people have a one legged retirement stool with no seat.
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Old 10-06-2017, 07:44 AM   #14
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Note based upon annual reports I think most corporations fund their pension plans at 80% (so lump sums are possible), and put the remainder as a misc liablity on their balance sheet. The megacorp I used to work for does this.
I think the PBGC pushes that. PBGC is on the hook for the shortfall (limited by caps for high earners), so they require the corps to keep the plan funded at a decent level. I don't think the corps can skirt the issue, unless they are formally in bankruptcy.

When my Mega-Corp got involved in a merger, the PBGC forced them to bump up the balance in the pension as a condition for approval. There were no other issues, so they used this as leverage to gain additional cushion.

-ERD50
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Old 10-06-2017, 07:48 AM   #15
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I think it was part of the Pension Protection Act of 2006. Companies covered by PBGC must pay higher premiums if they don't meet a certain standard of pension funding.
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