A report by ADP Research Institute today showed that U.S. private employers added 250,000 jobs in December, marking the biggest monthly increase since March, Reuters reported. Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 190,000 jobs, with estimates ranging from 165,000 to 225,000.Private payroll gains in the month earlier were revised down to 185,000 from an originally reported 190,000 increase. The report is jointly developed with Moody’s Analytics.
Assets of the 100 largest public employee pension systems in the U.S. rose about 2.8 percent in the third quarter of 2017 to above $3.691 trillion compared to the last quarter, according to U.S. Census bureau data released on Thursday, Reuters reported. Continuing growth that began in 2015’s third quarter, holdings of the nation’s top public pension systems jumped 9 percent from $3.386 trillion the same time the previous year. Governments made up 76.4 percent of the $44.2 billion in contributions, compared to 70 percent last quarter, while employee contributions comprised the rest. Total payments were roughly flat at $70.2 billion compared to last quarter. Payments have risen 4.4 percent from last year.
A group of Kentucky state workers filed a lawsuit against state retirement system officials and three asset management firms on Wednesday, saying they breached fiduciary duties by embracing high-risk, high-fee investments that yielded lackluster returns, Reuters reported. Kentucky has one of the nation's most underfunded public pension funds, with nearly $16 billion in assets and a shortfall the suit estimates to be at least $27 billion. The retirement and health benefits of 360,000 state workers, from police officers to janitors, depend on Kentucky's pension fund. The lawsuit in Franklin Circuit Court seeks damages from KKR Prisma, Blackstone Group and PAAMCO for losses on investments they recommended. It also names several former or current Kentucky Retirement Systems officials as defendants.
Rhode Island's pension liability for state workers grew to over $5.33 billion this fiscal year, the Associated Press reported. The larger deficit between the assets in the state's $8.3 billion pension fund and the future retirement benefits promised current and former employees was the result of a number of factors. The Providence Journal reports the unfunded liability grew by a combined $699 million this year. The figures were released Friday by the state's actuary to the state Retirement Board in Warwick, noting the unfunded liability for both state workers and teachers is expected to continue to grow until the 2019-2020 fiscal year. The pension for state employees is expected to be fully funded by 2038.
Regulators in Massachusetts and New York State said yesterday that they are probing MetLife Inc. after the insurer revealed last week it had failed to pay pensions to potentially thousands of people, Reuters reported. MetLife said on Friday that it believed the group missing out on the payments represented less than 5 percent of about 600,000 people who receive a type of annuity benefit from the company via its retirement business. MetLife, which pledged to fully cooperate with regulators, said the standard way for finding retirees who are owed benefits is no longer sufficient. “While it is still difficult to track everyone down, we have not been as aggressive as we could have been,” MetLife said.
The director of the Pension Benefit Guaranty Corp. told a congressional panel on Wednesday that pension premiums paid into his organization had been "too low for too long" to insure the nation's pension plan, which he said was a major factor in the plans' funding crisis, the Washington Examiner reported Wednesday. However, Thomas Reeder said that the crisis was so severe that raising the premiums for multi-employer plans would not solve the problem and may even make it worse. "I think the multi-employer program has premiums that have been too low for too long.... I realize that raising them is harder, but I don't think they reflect the economic reality of the obligations we have," Reeder told the House Education and the Workforce Committee on Wednesday. The Trump administration has proposed adding a variable rate premium on unfunded benefits and an exit premium on companies that withdraw from the plans. It estimates that this would add $16 billion to the PBGC's program over the next decade. It is still far short of what would be needed to cover the obligations, Reeder conceded, but would buy time to reach a fuller solution.
U.S. lawmakers have drafted legislation to create the Pension Rehabilitation Administration (PRA), a new office within the U.S. Treasury Department that would allow pension plans to borrow money to remain solvent while providing retirement benefits for retirees and workers, CIO Magazine reported. “With this bill, we responsibly shore up multiemployer pension plans and guarantee retirees the full benefits they earned,” said Rep. Richard Neal (D-Mass.), of the House Ways & Means Committee. The Senate and House Democrats who proposed the legislation said that the money for the loans, and the cost of running the PRA, would come from the sale of Treasury-issued bonds in the open market to large investors, such as financial firms, and other institutional investors. The PRA would then lend the money from the sale of the bonds to the struggling pension plans. To ensure that the pension plans can afford to repay the loans, the PRA would lend them money for 30 years at interest rates of around 3 percent. The 30-year loans are intended to buy time for the pension plans so they can focus on investing for the long-term health of the plan, while the loans pay benefits owed to current retirees. Under the proposed program, pension plans would borrow money from the PRA to purchase conservative investments that will cover the cost of paying current retiree benefits each month. Annuities, cash matching with investment grade bonds, or duration matching with a suitable bond portfolio were cited as possible investments for these funds. Retirees and their families would be guaranteed their promised benefits, and the loan proceeds would be prohibited from being invested in risky investments.
