Riley: Spin Doctor Seth at it Again
Tuesday, December 22, 2015
Meanwhile, back at mainstream media, Seth Magaziner spoke to Katherine Gregg about pension return leaving all of us totally confused about how we are doing. Let me make this clear, we suck. We have a pension shortfall that exceeds $1 billion dollars over the last 18 months.
There are two ways actuaries and think tanks report pension plan returns, they are either calendar year and/or fiscal year. Calendar year 2015 is about to end in two weeks and Fiscal year 2015 ended last June 30 and now we are half way through fiscal 2016.The State operates on a June 30 Fiscal year.
Here is what Gregg said
“As of Wednesday, the calendar year-to-date return on the $7.63 billion state-run pension fund was 0.88 percent, according to the state treasurer's office. By way of comparison: the pension fund stood at $8.06 billion a year ago.”
Is that clear to everyone?
Ok here is the reality.
Calendar year 2015 (as of today Tuesday December 22), the State is down 1.65%. They predicated they will compound returns for the next 24 years at 7.5% 2015 short fall was over $700 million dollars. Fiscal year 2016 is half way done and down 3.33%, if we were to finish this June 30 at the same level Rhode Island would be short $860 million dollars or one bridge toll plan. After losing the equivalent of 10 times 38 studios losses for the calendar year 2014.
The time has come to replace the adviser Cliffwater and fire the investment Commission members who are nothing but a rubber stamp. These returns are a complete disgrace and endanger the next generation of Rhode Islanders.
Governor Raimondo has been very quiet and distancing herself from the rookie Magaziner and the disaster in Providence. If she ever wants to go to higher office she should show some leadership.
Read Greggs article and mine. I think mine is the unvarnished truth. I don’t know what the heck Magaziner and Gregg were trying to say.
Related Slideshow: Timeline - Rhode Island Pension Reform
GoLocalProv breaks down the sequence of events that have played out during Rhode Island's State Employee Pension Fund reform.
Governor Don Carcieri makes pension reform a top priority in his emergency budget plan. His three-point plan included:
1. An established minimum retirment age of 59 for all state and municipal employees.
2. Elimination of cost-of-living increases.
3. Conversion of new hires into a 401(k) style plan.
See WPRI's coverage of Carcieri's proposal here.
Rhode Island's state administered public employee pension system only held 48% of the assets to cover future payments to its emplyees.
"This system as designed today is fundamentally unsustainable, and it is in your best interest to fix it" - Gina Raimondo
Check out Wall Street Journal's coverage here.
Gina Raimondo defeats opponent Kernan King in the election for General Treasurer of Rhode Island using her platform to reform the structure of Rhode Island's public employee pension system. She received 201,625 votes, more than any other politician on the 2010 Rhode Island ballot.
Raimondo leads effort to reduce the state’s assumed rate of return on pension investments from 8.25 to 7.5%.
Her proposal includes plans to suspend the Cost of Living Adjustment (which allows for raises corresponding with rates of inflation for retirees), changing the retirement age to match Social Security ages, and adding a defined contribution plan.
Raimondo releases “Truth in Numbers”, a report detailing the pension crisis and offering possible solutions. She continues to work to raise public support for her proposal.
"Decades of ignoring actuarial assumptions led to lower taxpayer & employee contributions being made into the system." - Gina Raimondo (Truth in Numbers)
Read GoLocalProv's analysis of the report here.
Read the Truth in Numbers report here.
Governor Lincoln Chafee and General Treasurer Gina Raimondo present their pension reform legislation proposal before a joint session of the General Assembly.
“Our fundamental goal throughout this process has been to provide retirement security through reforms that are fair to the three main interested parties: retirees, current employees and the taxpayer…I join the General Treasurer in urging the General Assembly to take decisive action and adopt these reforms.”- Gov. Lincoln Chafee
Head of Rhode Island firefighters’ union accuses Raimondo of “cooking the books” to create a pension problem where one did not exist. Paul Valletta Jr. states that Raimondo raised Rhode Islanders’ assumed mortality rate to increase liability to the state, using data from 1994 instead of updated information from 2008, and lowered the anticipated rate of return on state investments.
“You’re going after the retirees! In this economic time, how could you possibly take a pension away?” Paul Valletta Jr (Head of RI Firefighters' Union)
Read more from the firefighters' battle with Raimondo here.
Check out the New York Times' take on RI's pension crisis here.
November 17, 2011
The Rhode Island Retirement Security Act (RIRSA) is enacted by the General Assembly with bipartisan support in both chambers. RIRSA’s passing is slated to reduce the unfunded liability of RI’s pension system and increase its funding status by $3 billion and 60% respectively, level contributions to the pension system by taxpayers, save municipalities $100 million through lessened contributions to teacher and MERS pension systems, and lower the cost of borrowing.
Read more from GoLocalProv here.
November 18, 2011
Governor Lincoln Chafee signs RIRSA into law. According to a December 2011 Brown University poll, 60% of Rhode Island residents support the reform. Following its enactment, Raimondo holds regional sessions to educate public employees on the effects of the legislation on their retirement benefits.
Read about how Rhode Islanders react to RIRSA here.
Raimondo hosts local workshops to explain the pension reforms across Rhode Island. She also receives national attention for her contributions to the state’s pension reforms. The reforms are given praise and many believe Rhode Island will serve as a template for other States’ future pension reforms.
Read about the pension workshop here.
Read Raimondo's feature in Institutional Investor here.
March - April 2012
Raimondo opposes Governor Chafee’s proposal to cut pension-funded deposits. She continued to provide workshops on the pension reforms.
December 5, 2012
Raimondo publicly opposes Governor Chafee’s meetings with union leaders in an effort to avoid judicial rulings on the pension reform package. In response, Chafee issues a statement supporting the negotiations.
Read more about Raimondo's opposition here.
Read about Chafee's statement http://www.golocalprov.com/news/new-chafee-issues-statement-supporting-pension-negotiations/">here.
Led by the Rhode Island State Association of Fire Fighters, unions protest the 2011 pension reform outside of the Omni Providence where Governor Lincoln Chafee and General Treasurer Gina Raimondo conduct a national conference of bond investors.
Read about Raimondo's discussion of distressed municipalities here.
The pension plan comes under increased scrutiny as a result of the involvement of hedge funds and private equity firms. Reports show that $200 million of the state pension fund was lost in 2012.
"In short, impressive educational credentials and limited knowledge of investment industry realities made Raimondo ideally suited to champion private equity’s public pension money grab." - Ted Seidle (Forbes)
Read GoLocalProv's coverage of the State Pension Fund's losses here.
Read Ted Seidle's criticism of Raimondo in Forbes.
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- Riley: Providence, Ken Lay and the Securities Exchange Commission
- Riley: Simple Questions in Need of an Answer by Providence Officials
- Providence Pension Watchdog Riley Releases Report, Calls for More Answers
- Riley: Comparing Providence to Greece
- Riley: Providence Rhode Island Defaulted June 30, 2015…So What
- Riley: California Municipal Bondholder Law Follows Rhode Island
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- Riley: Raimondo Strikes Out
- Riley: MacBeth Has the Scent and Should Not Back Down
- Riley: Kushner and the “Hot Air Ball”
- Riley: GASB 68 is Here and Reports are Due
- Riley: Warren Buffett, Jorge Elorza and Jack Bogle
- Riley: Why Does Hoyle Allow Providence to Cheat Retirees and Other Cities Can’t?
- Forbes Columnist Siedle Responds to MINDSETTER™ Riley’s Charges
- Riley: AFSCME, Ted Siedle and Marcia Reback Hurt Rhode Island Retirees
- Riley: I Reject the Findings of 38 Studios Hearings - Part 2
- Riley: Effect of Insider Politics on RI’s Pension Fund Under-Performance
- Riley: What Happened to Rhode Island’s Municipal Pension Crisis?
- Riley: RI Investment Adviser “Sell Providence RI Bonds”
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