Kim crockett ESQ Vice president amp senior policy fellow Pension Data and Assumptions 8580 are from LCPR 2017 Valuation Reports Not Omnibus There is a palpable sense of urgency among all stakeholders as they ready themselves for another assault on the complicated politics surrou ID: 745548
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Keeping the Promise: Minnesota Teacher Pensions
Kim crockett, ESQ.
Vice president & senior policy fellowSlide2
Pension Data and Assumptions (8.5%/8.0%) are from LCPR 2017 Valuation Reports (Not Omnibus) “There is a palpable sense of urgency among all stakeholders as they ready themselves for another assault on the complicated politics surrounding public pensions. Everyone agrees that something absolutely needs to be done this year. However that “something” is still rooted in ideas and strategies that expose taxpayers, pension beneficiaries, and future government services to unacceptable risks.”
Mark Haveman Minnesota Center for Fiscal ExcellenceSlide3Slide4Slide5Slide6Slide7Slide8Slide9Slide10Slide11Slide12Slide13Slide14Slide15Slide16
Conclusion: Even Fully Funded Defined Benefit Plans?
Too many teachers left insecure; their contributions used for another’s benefit. Slide17
DB Backloading: Josh McGee LCPR January 28, 2014Benefits are backloaded, meaning that workers accrue most of their retirement benefit in their last few years of work.
Backloaded benefits can leave employees on a retirement- insecure savings path through much of their careers. The benefit structure also creates strong financial and psychological incentives in the years around retirement eligibility thresholds. Benefits disproportionately reward those who enter the workforce later and who move into highly paid jobs. Slide18Slide19Slide20Slide21
Calculate Unfunded Liability (UL) using realistic assumptions
Close the DB plans to new entrants
Consider further sustainability reforms to DB plans
Plan for long-term debt repayment
Move new employees into DC Plan like
MnSCU
DC plans do not have Unfunded Liabilities
De-politicize Employee Retirement
Consider changes to pension board governance
Move UL to the state budget (see bond rating)
Enforcement mechanism?
Recommendations
KEEPING THE PENSION PROMISE: an ethical imperativeSlide22
Keeping the Promise: Minnesota Teacher Pensions
Kim crockett, ESQ.
Vice president & senior policy fellow