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Pension Cuts in the 2015 Federal Spending Bill

There has been a lot of concern from various folks about the 2015 Federal Spending Bill just passed by Congress and signed into law by the President.  The pension cuts portion of that bill does not deal with the LEOFF 1 pension plan or any other government plan but rather addresses pensions that are generated for multiple employers.  I.e., pipefitterss, welders, machinists, etc. where the pension plan covers workers from several areas.  The bad part of this plan is that it could cause some legislators to think they could apply the same principal to state pensions.  The principal problem is that this new legislation attempts to remove contractual nature from establish plans and thus empowers the possible reduction of pension benefits for plans that could possibly be in default sometime in the future.  Hopefully there will be lawsuits that will block this.

Please follow the link  to view a pretty good discussion of this bill that was shown on CSPAN. Karen Friedman of the Pension Rights Center talked about cuts contained in a 2015 federal spending bill to government-guaranteed pension plans that would affect benefit recipients.** This clip is part of C-SPAN Classroom’s FREE resources for teachers and students. Visit www.c-spanclassroom.org for more info.
Matt Smith, the Washington State Actuary issued the 2013 actuarial evaluation for the state retirement systems. LEOFF 1 is still one of the healthiest retirement systems in the country. The actuary reported that the LEOFF 1 retirement system is 125% funded and has a surplus of 1.107 billion dollars. Remember when in 1977 they told us that the fund had an unfunded liability and had to be closed? Now is appears the LEOFF 1system could have continued without the problems that were alleged. Unfortunately only a few LEOFF 2 members who are working today fully realize how hard we fought this only to be defeated by the legislature, city, county and media opponents.
The Office of the State Actuary has just issued the 2013 Actuarial Evaluation.  It is a complex study and we will be reviewing it to provide members with an understandable summary.  The bottom line is that LEOFF 1 remains one of the healthiest pension systems in the country with a funding ratio of 125.1% and a surplus of $1.107 billion. 
You may have heard or read in the paper that the Washington State Supreme Court issued opinions in two cases related to the state’s pension system on August 14, 2014. One case involves gain sharing provisions and early retirement benefits for the members of certain state retirement plans. The second case involves annual increases for retirees in two closed pension plans, often referred to as the Uniform COLA, cost of living adjustment.
On July 3, 2014 the Illinois State Supreme Court filed an opinion on a case titled Kanerva v. Weems, 2014 IL 115811. The facts of the case follow:

On July 1, 2012, State of Illinois’s Public Act 97695 took effect. It eliminated the statutory standards for the State of Illinois’ contributions to health insurance premiums for members of three of its retirement systems and established, instead, a new system under which the Director of the Department of Central Management Services would make an annual administrative determination as to the amounts to be charged to the State and to its retirees. This statute thus fundamentally altered the State of Illinois’s obligations to contribute toward the cost of group health insurance benefits for these retired state employees.

Court: State can nix public pension increase

SEATTLE TIMES — August 14, 2014: The Legislature had the right to eliminate state employee pension increases that were approved during the stock market boom of the 1990s, the Washington Supreme Court said unanimously Thursday in two decisions that save the state billions of dollars but leave many public employees feeling cheated.

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The Washington State Supreme Court today, August 14, 2014,  issued opinions in two cases related to the state’s pension systems. One case involves gain sharing provisions and early retirement benefits for members of certain state retirement plans; the other involves an annual increase for retirees in two closed pension plans (also known as the Uniform COLA or “UCOLA”).
As of December 31, 2013, state and local government retirement systems held assets of $3.88 trillion. These assets are held in trust and invested to prefund the cost of pension benefits. The investment return on these assets matters, as investment earnings account for a majority of public pension financing. A shortfall in long-term expected investment earnings must be made up by higher contributions or reduced benefits.
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