Medicare is the federal health insurance program created in 1965 for all people age 65 and older, regardless of their income or medical history, and now covers 47 million Americans. Medicare, in conjunction with Social Security, plays a vital role in helping to provide financial security to seniors and younger beneficiaries with disabilities.

This October 2011 Pension Research Council paper titled, Public Pension Pressures in the United States, discusses why public pensions have warranted so much interest of late, focusing on their financing status and reform options. One reason is that some in the private sector are experiencing “pension envy” on learning that public pension benefits are often more generous than those paid to private sector employees.

The Office of the State Actuary has released the final Pension Evaluation report.  The valuation is completed every two years and  this one is the 2010 Actuarial Valuation (June 30, 2010, valuation date).  So, as always we are looking at data that is already in excess of a year old. 

You can download a copy of the report here:  http://osa.leg.wa.gov/Actuarial_Services/Publications/osa_valuations.htm

These reports are always very technical and there is always a risk of cherrypicking favorable data and reacing inappropriate conclusions.  Over the next couple of weeks we will be discussing those parts of the report that of concern to LEOFF 1.  Hopefully we will not fall prey to the danger outlined above.

Matt Smith, the Washington State Actuary, has released a preliminary copy of the 2010 pension evaluation. 

The evaluation shows the LEOFF 1 Pension Plan to have liabilities of $4.381 billion and valuation assets of $5.561 billion.  That leaves a surplus of $1,180 billion or 127% funded.  That is the highest funded ratio since 2001.

The final version of the report will be issued October 31, 2011.  Click here to view the preliminary report.

Recently, there has been a series of articles in the Seattle times about pensions and pension funding.  We will be posting information from those articles shortly.

Washington state's public pensions are among the best-funded in the nation. Guest columnists Steve Hill and Theresa Whitmarsh dispute criticisms and the idea that public pensions should be valued in the way that private pensions are. See the article in the Seattle Times.

Washington state pensions are in worse shape than state officials would have citizens believe. Seattle Times guest columnist Andrew G. Biggs writes that the largest failing of the state's current pension system is the nature of elected leaders to make benefit promises without paying for them.

See the article in the Seattle Times.

If the state actuary's recommendations are adopted next month, Washington's future pension costs will rise at a time the state already is considering new and deeper spending cuts.  See this article in the Seattle Times.

Judges in Colorado and Minnesota have dismissed court challenges by retired public workers whose pensions had been cut — developments that may embolden other states and cities to use pension reductions as a tool to help balance their budgets.

This is an article from the NY Times.  Click here to view the full article on their site.  Rember these cases are not from Washington, but they still reflect the current trend in litigation and public pensions.

The latest on the Medicare lawsuit can be found at www.thefundforpersonalliberty.org/medicare-lawsuit-update/index.html displaying an article titled, "Federal District Court Judge Rules All Seniors Receiving Social Security Must Participate in Medicare Part A or Forfeit Past and Future Retirement Benefits."

With a March 16, 2011 decision a federal District Court judge [Rosemary Collyer] has dismissed a two-and-a-half year lawsuit charging the Social Security Administration (SSA) and Department of Health and Human Services (HHS) with adopting policies that deny otherwise eligible retirees their rightful Social Security benefits if those retirees choose not to enroll in Medicare. The lawsuit, known as Hall v. Sebelius, was originally filed October 9, 2008.

Three Big Secrets of Happy Retirement Here is a happy statistic: Sixty-eight percent of retirees surveyed said they were highly satisfied with retired life. Another 27 percent said they are fairly satisfied. Overall, the survey found the following three explanations for why some retirees are happier than others:

Editor's Note:  This article should make all LEOFF 1 folks feel very fortunate.  It is important information to pass on to our kids while they still have time.

More than a quarter of U.S. workers said they are "not at all confident" about their ability to afford a comfortable retirement -- the highest percentage in decades, according to an annual survey conducted by the Employee Benefit Research Institute. 

More than half of workers surveyed had less than $25,000 in savings and investments, excluding their primary residence and any defined benefit pension plan.  Twenty-nine percent say they have less than $1,000 in savings.

Only 42 percent report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire.   Seventy-four percent report they plan to work in retirement, three times the percentage of retirees who say they actually worked for pay in retirement (23 percent). 

Click here to view EBRI's Report. 

Click here to view a Bloomberg article about the report.

On January 20, 2011, Center on Budget and Policy Priorities issued “Misunderstandings Regarding State Debt, Pensions, and Retiree Health Costs Create Unnecessary Alarm – Misconceptions Also Divert Attention from Needed Structural Reforms.”

The Congressional Budget Office (CBO) on December 9, 2010 issued a report describing the economic conditions and budgeting practices that can lead to significant budgetary challenges termed as Fiscal Stress Faced by Local Governments. Next, it reviews the options available to local governments, state governments, and the federal government for addressing such financial difficulty. Last, the report examines two options that local governments very rarely use: defaulting on their debt or filing for bankruptcy.

We have had several articles dealing with pension funding and pension health. This document generated by the State Treasurer discusses the issue again.

Recent national news stories about strapped state finances often highlight pension funding as one of the most serious challenges facing state and local governments. Surprising for some, the State of Washington does well in these rankings. The Pew Research Foundation’s recent analysis (The Trillion Dollar Gap, Pew Charitable Trust, 2010) of state pensions ranked Washington fourth in the country for combined funding of its 13 pension programs.

As part of her 2011-13 biennial budget proposal, Governor Gregoire has introduced a number of changes to the state’s pension system.

They primarily affect members of Plans 1, new hires, and higher education retirement plans.

I was in Olympia on Tuesday to confirm my interpretation of the Governor's recent remarks regarding the repeal of certain retirement benefits. The Governor's remarks were not meant to impact RCW 41.26, the LEOFF Law. The COLA repeal that she was referring to will impact the PERS and TERS Retirement Systems. These benefits were deemed to be non-contractual when given. This particular repeal if carried out will not challenge or impact the Bakenhus Ruling in regards to contractual protection. This however puts us on notice that we will have to be very diligent during the coming (long) legislative session to head off any thought or discussion that will have a negative impact on the LEOFF I Fund or retirement system.

Dick Warbrouck

Well by now everyone has either read the newspapers, saw TV news or otherwise heard about the Gov. plan to eliminate the COLA for PERS1 & TERS1 pensions. This has generated a lot of discussion and worry by some about what it means for LEOFF 1.

The plan by the Gov. only pertains to State employees and has no effect on LEOFF 1. We are guaranteed our COLA under 41.26.

PERS & TERS 1 are covered under a 1995 law enacted with a provision that it is not contractual and can be eliminated by the Legislature at any time. I have contacted Jamie Daniels, WACOPS Executive Director and she and Lee Reeves, our lobbyist have talked to the Gov. office and confirmed only PERS & TERS are being discussed. I also contacted Joe Fischnaller this morning and brought him up to speed on what is going on. He too is not overly concerned. What we have to do is just keep an eye on the situation.

LEOFF 11 I believe would be in a more vulnerable position than LEOFF 1 so be assured that WACOPS & Council of Firefighters will monitor this. There is nothing else going on and should anything change or happen regarding LEOFF 1. I will let you know. The RCW for the 1995 legislation re PERS & TERS is 41.40.197.

FYI I had contacted each of you earlier this year with my plan to resign my position with WACOPS Executive Board but circumstances changed and I'm still here and keeping an eye on LEOFF 1 along with Jerry Taylor, LEOFF1.net,and Dick Warbrouck, Retired FF of Washington

A new report from ING confirms that many state and local government workers are experiencing the same retirement pressures that exist today in the private sector.

According to the findings, a majority of these employees (61%) said they were unsure or uncomfortable about their ability to set aside enough for retirement. A significant number (43%) have become less confident about their savings since the market downturn. Yet most, (72%) have not changed the amount they are investing to address these concerns.

The Pew Center on the States who identifies and advances effective solutions to critical issues facing states has published a report titled "The trillion dollar Underfunded State Retirement Systems and the Roads to Reform". According to the report a $1 trillion gap is what exists between the $3.35 trillion in pension, health care and other retirement benefits states have promised their current and retired workers as of fiscal year 2008 and the $2.35 trillion they have on hand to pay for them. In fact, this figure likely underestimates the bill coming due for states' public sector retirement benefit obligations: Because most states assess their retirement plans on June 30, the calculation does not fully reflect severe investment declines in pension funds in the second half of 2008 before the modest recovery in 2009.

A new August 2010 brief from the Center for State and Local Government Excellence finds that the economy has slowed the ability of local governments to address long-term funding of their Retiree Health Care (RHC) obligations.