Subject: Monthly Newsletter
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City of San Diego Retired Employees' Association Newsletter October 2009 |
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| Vol. 17 Issue: #10 |
October 2009 |
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War Memorial Bldg - Balboa Park
Board Meeting .................. 9:30 a.m.
General Meeting ................ 11:00 a.m.
Program .......................... 11:15 a.m.
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WELCOME TO NEW MEMBERS THIS MONTH
Kikue Graeber, SDPD
Patricia J. Marn, City Council Offices
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PROGRAM
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Tom Blair, Editor-In-Chief of San Diego Magazine will be our speaker this month. Mr. Blair will give us insider information on what is happening in San Diego. The magazine ranges "...from the best places to dine and travel to the politics, and people that shape the region" San Diego Magazine has 410,100 readers.
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| PRESIDENT'S MESSAGE by Nancy Acevedo |
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Our September speaker was Actuary Bill Sheffler, who also served on the Mayor's Pension Reform Committee and, until recently, was a member of the SDCERS Board. Usually I write a synopsis of the speakers presentation, but with the subject being what would happen to retirees if the City went bankrupt, I thought it important to make sure it was reported accurately - so I asked Bill to provide his notes for our newsletter, which he graciously agreed to do. So this information is straight from our speaker.
"The information on the consequences of municipal bankruptcy on a retirement plan sponsor by the subject City is thin. In the Orange County bankruptcy, and subsequent recovery, their pension plan emerged without any changes.
"In May 2008, the City of Vallejo filed a case seeking bankruptcy protection and the adjustment of its debts under chapter 9 of the United States Bankruptcy Code. The proposed adjustment includes a reduction in future accrual for city employees. The safety employees have filed their own objection to the proposed future reduction. Those matters have not yet been settled.
"When we are talking about municipal bankruptcy, there should be no assumption that the plan sponsor's bankruptcy would lead to a shutdown
or bankruptcy of their pension plan. But the flow of contributions to the plan may be dramatically reduced. This is the consequent concern for the plan's trustees, and beneficiaries.
"The history of distressed pension plan operations in the private sector is much more detailed. There is also a substantial consistency in the benefit payment actions in those cases. I propose that this
history and the current state of regulation of private sector plans gives us a good idea of what might occur if a municipal plan were in distress.
"Pre-ERISA the pension plan assets of private sector employers were generally subject to creditor claims. There were elaborate measures
taken to provide creditor protection, however those measures were not always successful. After the passage of ERISA in 1974, creditor protection was much easier for a retirement plan to attain.
"At that time, federal regulation established the priority of claims for beneficiaries of distressed plans. Those priorities were:
1) Employee contributions had the highest standing, if plan assets were sufficient requests for refunds were to be honored first. Voluntary contributions had priority over mandatory contributions.
2) Next, assets are allocated to plan benefits that were payable three years before the plan ended. Benefits in pay status with less longevity were subordinate.
3) Benefits payable to employees eligible for normal retirement but still employed.
4) Accrued benefits payable in the future to employees who were not yet eligible for normal retirement.
"Except for 1), these distributions are to be made in the form of annuities, and not lump sums. In the case of 3) and 4), the allocations were based on benefits payable at normal retirement age. Those annuities were the joint-and-survivor type for married participants and single life annuities for the others. They did not include early retirement or any subsidies connected with early retirement. Neither did they include any pre-retirement death benefits.
"This group should understand that the funded security of this plan is not the funding ratio most widely advertised. The actual funded status, in case of plan shutdown, is expressed deep in the actuarial report in an exhibit called "FASB 35". This funding ratio does not include any allowance for future accrued benefit on account of salary increases after the valuation date. For instance, if a non-retired participant with average monthly compensation of $3,000 has earned a benefit of 25% of pay on the valuation date, then that benefit ($3,000x .25) $750 per month is the amount valued. The traditional funding ratio includes an assumption of future salary increases until retirement, and a larger benefit due to those increases. If this individual was 10 years from retirement the valued benefit would be $1,110, instead of the $750.
"Finally, it should be pointed out that a municipal bankruptcy is much more difficult to obtain than that of a private sector company. In the private sector, the employer only needs to demonstrate that its debts exceed its assets. Cities must demonstrate that they do not have sufficient cash flow to pay their current bills, regardless of the
amount of debt they have."
So, in essence, we current retirees can breathe easier!
As those of you who receive the UT read on September 19, the SDCERS Board voted not to change the "corridor" and to present the true pension fund bill to the City. The Mayor also stated that the City would pay that bill, even though it could result in service cuts and job losses.
On the status of the Social Security Fairness Act of 2009, Congress has not taken any additional actions. However, the State legislature adopted, and the Governor signed, a resolution to "...request the President and the Congress of the United States to enact the Social Security Fairness Act of 2009, which would repeal the Government Pension Offset and the Windfall Elimination Provision from the Social Security Act." Copies of the total bill, including all the "Whereas'es", are to be sent to the President, Vice President, Speaker of the House, Majority Leader of the Senate and each California Senator and Representative. We will have to see if this has any impact on moving this issue forward.
Nancy
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| SDCERS RETIREMENT BOARD UPDATE by Board Member Patti Karnes |
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At the Friday, September 18, 2009, SDCERS Board meeting David Bond reported that Member Services staff now have a new tool to better assist members over the phone. Staff can now quickly reset forgotten passwords and locked-out accounts after members verify identity. Staff can also read data along with the member to better understand and answer questions.
The Board considered whether to change the current 120% corridor, which has a major impact on the Annual Required Contribution from the City. The Board focused on continuing to recover from previous City underfunding.
Gene Kalwarski of Cheiron narrowed the Board's choices to:
1) If the Board voted for "no change" all actuarial standards would be met and SDCERS would have better funding; or
2) As an alternative, he offered a one time corridor change that would not apply to future years and also did not have actuarially significant differences, but would result in future higher Annual Required Contributions (ARC) for the City and a somewhat reduced temporary funding ratio.
After extensive Board discussion and public comment, the Board voted to keep the 120% corridor. Mark Hovey, CFO,reported to the SDCERS Board that with investment earnings in addition to annual plan sponsor and membership contributions, the cash flow of the system is positive and would improve the funded status each year. However, if investment earnings were assumed to be zero each year for 30 years, all of the plan sponsors would have sufficient cash reserves on hand to fund benefit payments as follows: 22 years for the City of San Diego, 26 years for the Port of San Diego, and over 30 years for the Airport Authority with only annual plan sponsor and member contributions.
Mr.Kalwarski noted that numbers are not yet available on the City's new pension system, so the July 2010 ARC for the City is not available.
Former MEA Union President Judie Italiano's lifetime monthly pension benefit was reduced from $6,496.36 effective 8/4/04, to $473.46 based on a 6/30/09 service retirement date. SDCERS' actuary predicts Ms. Italiano will be 86 years old before she re-pays the overpayment of $272,322.02. MEA has sued SDCERS and the City on her behalf to enforce the right to a pension. The IRS disallowed the Presidential Leave retirement contribution program. The City's demurrer was overruled and it answered the First Amended Complaint and cross-complained for declaratory relief and indemnity against SDCERS. There will be a status conference on October 9, 2009.
SDCERS funding level, audited for July 31, 2009, was
$3,587,682,000.
Patti
WEB- Board meetings are archived and are available for viewing on line at any time (after the meeting) via the SDCERS web site.
TELEVISION- If you live in the City limits, Board meetings are on Channel 24 around 5 or 6pm, usually the third Friday of the month, and usually repeat on Sundays at 1 p.m. Official CDs of SDCERS' committees and Board meetings are available through the Board Secretary; visual recordings are available through City Channel 24. Motions and votes are in SDCERS monthly summaries of Board meetings.
For previous reports and announcements about when meetings are scheduled, please logon to our website at www.csdrea.com
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| "HELPING HANDS" by Committee Member Ruth Ann Hageman |
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"Helping Hands," CSDREA's new Standing Committee, provides information for survivors of retired employees. Helping Hands was established this summer in the Association's By Laws with the approval of the Association Board and the General Membership.
Your assistance is needed in contacting the Helping Hands Committee members when you know of the death of a retiree, especially if that retiree lived out-of-state or out-of-the-country. Also, while committee members peruse the San Diego Union Tribune daily for news of the death of a former City employee, it would help us in our work if you could pass along information about any deceased retiree who you worked with or were friends with.
The "Helping Hands" Committee was established with the encouragement of "Hand in Hand," a group founded by two widows of the Fire Department, Cherie Olaveson and Sarah Contreras, who had established their group to provide bereavement support for widows/widowers of deceased Police and Fire sworn personnel.
"Helping Hands" has taken on the task of reaching out to the survivors of all retired City Employees who were not Police and Fire sworn personnel. Anyone who is interested in joining the work of this committee, please contact Ruth Ann Hageman at (858) 270-8530 or Sylvia Tatum at (858) 272-0494.
The "Helping Hands" Committee has put together an information packet to better help a survivor through the difficult time following a death. The packet of information will be available for bereaved persons, and it can be delivered in person or by mail. The information does not constitute legal or financial advice; instead it is meant as a general information guide.
One of the first steps to take upon the death of a retiree is to contact the City of San Diego Retirement office (SDCERS) (619) 525-3600 or (800) 774-4977. You will be asked to provide the member's Social Security number, date and place of death, and health insurance information if you have it. The representative may give you additional instructions on things that are needed so that you can follow through with their directions.
The information packet includes the following resources:
"Checklist at the Time of a Death" by Janet Burgess
"Income Tax Information" by Carmen Lutes
"Front Porch: Moving Can Be Made Easier" by Catherine Lubenski, San Diego Union Tribune
"Get the Max out of Social Security" by Linda Stern, Reuters
Other Resources:
"Read this if I am Dead," by Humberto Cruz, Tribune Media Services
"Social Security Death Index" by Doug McHenry
"Medical Due Diligence: A Living Will Should Spell out the Specifics" by Jane Brody, The New York Times
"Five Wishes" by Aging with Dignity, www.agingwithdignity.org
"Family Records Organizer," A CD available free from T. Rowe Price
Ruth Ann
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General Announcements
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THANK YOU September Greeter
Mary Lynn Hyde
TURNING 80? Then your CSDREA membership is FREE. Call Sylvia at (858)272-0494.
Janet Burgess and Mary Lynn Hyde have graciously agreed to be at the door this year to greet you. If you would be willing to help them by doing this one month, please contact Janet at 619-463-7440 or by email at jburgess911@cox.net or Mary Lynn at mlhyde@san.rr.com
Winner of Trader Joe's Gift Card for September: Mary Bush
HAPPY BIRTHDAY - Walter R. Newbern 09/02/28 and Susie Davenport 08/14/29
Do Not Call List for Cell Phones
All cell phone numbers are being released to telemarketing companies so you will start to receive sales calls, and YOU WILL BE CHARGED FOR THESE CALLS. To prevent this, call the following number from the phone you want to block: 888-382-1222 This is the National DO NOT CALL list. It will only take a minute of your time. It blocks your number for five (5) years. You must call from the phone number you want to have blocked. You cannot call from a different phone number.
IN MEMORIAM - Jessie C. Baxter - passed away on September 11, 2009. Jessie worked for the City as a PBX operator, and later as an executive secretary from 1958 to 1977. She was well known for her sweet disposition and soft voice.
Do you know a member who is ill or who is over 80 years old and having a birthday? Notify Sharon Beach (619-934-8202) so the word gets passed along and a card is sent. Also, if you know of someone who has died, please let us know. You may also submit a short bio of that person for publication.
City of San Diego Employee Assistance Program (EAP) is available to city retirees. This assistance is confidential. Contact EAP at 619-533-3460.
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