Pension Tidbits

With the stock market having taken a nose dive in December and then bouncing straight up in January, it is interesting to read news on the situation around pensions.

Here's three articles that I found interesting:

This one is rather minor, but being from California and reading about the situation around PG&E, I had to read this article from The Sacramento Bee:

The California Public Employees’ Retirement System, which manages about $350 billion in investments, owned about 1.8 million shares of PG&E Corp. at the end of November, according to the latest figures available from the fund. At the time, the shares were worth about $47 million. CalPERS also owned Pacific Gas and Electric Co. securities worth about $35 million, according to the fund.

At the end of November, the stock price was around $26. At the end of January, it was around $13. If CalPERS still own the stock, it would equate to a loss of around $23 million. Not even a 0.1% hit to the fund. But then I guess when you're trying to hit a 7% return, even 0.1% counts.



Forbes has an article up where an actuary takes a deep dive into Chicago's pension. She takes a look at an annual financial report.

Her high level conclusion:

. . . inevitably means that the only way to stay appropriately-funded is to commit to boosting contributions, perhaps substantially, when needed, and run surpluses to minimize the need, or to define plan benefits in a way that's adjustable to avoid this.

I suppose one could also just increase taxes?

Her work has funding status at less than 30% as of 2017.

And back to California, is Governor Newsom taking a hard look at pensions?

From the OC Register:

. . . Gov. Gavin Newsom may be reconsidering his apparent former support for the “California rule” on public pensions as the looming financial crisis they are helping to cause deepens. Capitol reporter and pensions expert Ed Mendel notes that, unlike former Gov. Jerry Brown, Newsom told a firefighter group during his campaign last year that he then supported the so-called rule, which is a complex series of court decisions that public worker unions like because they forbid future pension cuts for current workers. But Mendel adds that The East Bay Times reported that Newsom said recently he is re-evaluating his position. The California Supreme Court will soon announce its verdict in a case that could modify the California rule. 

Of course, was Newsom just trying to get elected when supporting the "California rule" while knowing that if he won, he'd have to reverse course?