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CT’s Pension Funds Lose Value in 2012

According to a report the state pension funds had a negative return.

Connecticut’s pension funds are due to a $44.8 billion deficit, according to one study. Now, the fund is dealing with more problems after experiencing a negative return in the 2012 fiscal year.

According to Reuters, the state’s two pension funds for teachers and the other for state employees lost .9 percent of their $24 billion value. The year before was a record year, with a 21 percent return. The budgeted annual rate of return is more than 8 percent for both funds.

As of the fiscal year 2010 — the most recent year included in a Pew Center on the States study — Connecticut’s pension was only 53 percent funded, leaving a liability of $44.8 billion. The only state with a worse percentage is Rhode Island.

Recent reforms enacted since Gov. Dannel P. Malloy have not been included in the time frame of the study, such as layoffs and reductions in benefits. According to the study, Malloy reportedly proposed a pension funding plan “calling for the state retirement system to reach 90 percent funding by 2025 and full funding by 2032." 

Dr. Robin Appleby August 10, 2012 at 11:43 AM
"The budgeted annual rate of return is more than 8 percent for both (pension) funds." It is going to be VERY difficult to get 8 % returns, consistently, on the pensions in the current environment....4 %....maybe. Guess who gets to pay the $ 44 BILLION dollar shortfall in their pensions ? You do ! Many of you dont even have a pension but the Democrats in Hartford will keep raising your taxes to make up for the shortfalls. Time for some serious house cleaning in Hartford.
John Funk August 10, 2012 at 12:48 PM
Mr. Appleby: When their pension funds fall short.. shouldn't current teachers and other state employees make up their shortfall by themselves? (rhetorical question) Why is this a burden of the taxpayer? It shouldn't be. One idea is to go back to the table and re-negotiate these sweet parachute deals.
John Funk August 10, 2012 at 01:00 PM
Additionally, I came across this interesting explanation (YouTube) of the US Federal budget and entitlements. We need to get Connecticut's spending appetite in check.. as well as Washingtons! http://youtu.be/EW5IdwltaAc
Jerry Friedrich August 10, 2012 at 03:33 PM
Robin, I think its important to take the next step and find out the mix of investments. A fund with big changes ( + 21 to minus 9) raises questions to me as to how it is being invested and who is doing that investing. .
Steven DeVaux August 10, 2012 at 05:10 PM
Robin, It clearly sounds like they are betting on the passing on of the baby boomer generation (20 years) as the solution. They do not explain their answer in the mean time. Action now yields results later. The "no layoff" guarantee given by the current administration has locked in the long term liability. The problem lies in the rapidly declining assets. 3 studies have show that by 2016 they will require annual budget funds just to maintain the projected payout by then due to the huge spike in baby boomer retirements which has the double whammy of stopping contributions and starting withdrawals. They don't have enough time to adjust and compensate due to a failure to fund what the actuary said to. Same problem in Brookfield, just a couple of years off. It is the failure to follow the actuarial recommendations that have caused this iminent collapse on a scale similar to Rhode Island's.
Bob McGarrah August 10, 2012 at 06:12 PM
And who is doing the fund managing from the town?
Dr. Robin Appleby August 10, 2012 at 06:33 PM
I say this in all seriousness. Knowing Jerry Friedrich quite well, and what he is capable of, if Jerry ran the pensions for the State of Connecticut and the Town of Brookfield, I will bet anyone that he could earn 20 % increases a year.
Steven DeVaux August 10, 2012 at 07:08 PM
Only David Scribner, town treasurer, is managing it, per the charter. He only gets "advice" from the pension committee and nothing from the First Selectman - per the charter.
Mary Davis August 10, 2012 at 07:11 PM
I'm somewhat new to Brookfield.. but back in my home state (Rhode Island) Gilbert McLaughlin was fire chief in Providence from July '90 through Sept. '91, (a little more than a year) when he retired at age 55. He was making $ 59,000 a year. His pension was 67 -1/2 % of his salary. He is now getting $197,000 a year, tax free, thanks to the generous 6% yearly cost of living increase that the (Democrat..like everything in Rhode Island) Retirement Board awarded retirees. McLaughlin is now 75 years old. If he lives to 84, his pension will be $ 313,685 per year. At 89, he will receive $ 419,718 per year and will get $ 796,871 if he lives to be 100. At that point, he will have received roughly $ 13 million of pension benefits. When McLaughlin dies, his wife automatically receives the pension until she dies. The pension then passes to any children under 18. (have to keep the wife and kids on the taxpayer gravy train so they will keep voting Democrat). This is being repeated all over the country and probably is similar in Connecticut except In Rhode Island it's more upfront and obvious..Connecticut politicians are at least more discreet in their indiscretions. You wonder why states are going broke? Sleazy politicians using taxpayer money to buy votes and elections. My generation is expected to pay for it. I refuse to.. PLEASE STOP THE INSANITY!
Steven DeVaux August 10, 2012 at 07:15 PM
Well spoken Mary. Do you know the size of the town AND the state pension DAVID SCRIBNER is going to get? The answer will shock you and he was never a first responder!
Steven DeVaux August 10, 2012 at 07:17 PM
Oh yes, I almost forgot to mention it Mary...he RUNS the town pension plan.
Rob Gianazza August 10, 2012 at 09:04 PM
Prior to the market collapse in 2008, pensions were funded in a reasonable manner. After the collapse, the percentage of funding fell off significantly. Politics aside, and by this I mean the way unions negotiate pensions, it stands to reason that as the market slowly recovers, so will the pension reserves. The big question is WHY are we seeking to be 100% funded? We only need ALL the funds if every town employee was to retire at the same time. Do we need to fund the pension fund? You bet we do! Does it need to be 100% funded? Why not 90%? Monday evening a proposal was made to the Board of Selectmen to borrow money to fully fund the pensions. Millions of dollars in interest payments would be required to accomplish this. We need to stop the cycle of reckless spending now.
Rob Gianazza August 10, 2012 at 09:09 PM
Mr. Funk and anyone else interested, I urge you to contact Harry Shaker and myself pertaining to this question. We served together on the negotiations sub committee for the Board of Education. We can explain the process of how these pensions are part of the employment contract with the Town of Brookfield. While the pensions are managed by the Town and not the BOE, we can offer significant input as to how the process works.
Linda Taylor August 10, 2012 at 10:24 PM
Gov. Malloy and the Democrats recently raised 50 taxes by another $1 billion dollars, the largest tax increase in Ct. history, but it's still not enough....No matter how many tens of billions of dollars the taxpayers send to Hartford..It is never enough for their spending. We seem to still have chronic budget "shortfalls". Now we are on the hook for almost $45 billion dollars for their pensions...yet many, if not most of us, don't have a penny of pension for ourselves, or our families retirement. Doesn't seem fair does it? We worked hard all our lives too!
Rob Gianazza August 10, 2012 at 10:39 PM
True, many of us worked hard all our lives, but many of us did not work under a contract that offered us a pension. I do not dispute the fact these employees are entitled to the pensions that were part of their employment contracts. What I question is the negotiations process that allowed these pensions to be exploited in some cases. It was those elected/appointed officials that agreed to the conditions which placed an unsustainable burden on future generations of taxpayers.
Howard Lasser August 10, 2012 at 11:46 PM
There is a lot of misinformation being posted here. This is totally incorrect. First of all you do not fund the full cost of the pension at 100%. You fund the calculated present value of the earned liability. Second, the recommendation by the Retirement Benefits Advisory Committee (RBAC) is not to borrow money to fund the Pension. That is totally wrong! As of the end of the fiscal year, June 30, 2012, the town added $1 million to fund balance. The recommendation is to use a portion of this to fund the pension at 100% of the Actuarial Recommended Contribution for the current fiscal year. They also offered a suggestion as to how we can continue to fund at 100% of the annual contribution amount going forward. In NO way does it involve any borrowing. To address other statements posted here, the Town Treasurer does not manage the pension funds. The Board of Selectmen is responsible for the management of the pension funds. This past year, based on the recommendation of the RBAC and after a long search and interview process, the pension funds, by act of the Board of Selectmen, were put under the management of Wells Fargo Investor Services. The Treasurer serves as one member of the RBAC which is also made up of a representative from the Board of Finance, the Board of Selectmen, the Town’s Controller, the Board of Education’s Financial Director and three members from the community.
Linda Taylor August 10, 2012 at 11:51 PM
Rob, I also do not dispute the fact that these people have earned these pensions and are entitled to them..The problem is towns are going bankrupt trying to fund these pensions now. There was no foresight! hindsight is 20/20!!
Rob Gianazza August 11, 2012 at 12:27 AM
Howard, I grow tired of your condescending attitude. Spin it anyway you want. First of all, the money that you wish to take from the fund balance was the money that was returned to the town from the insurance settlement for the tree issue several years ago. It wasn't a windfall. Second, the presentation was talking about how to make up the shortfall to get us to 100% funded which included interest payments. Perhaps you think that bonding and borrowing are different things. To taxpayers, it means the same thing. Here's a bit of advice, try talking TO the people instead of AT them, maybe your message will be better received.
Howard Lasser August 11, 2012 at 01:04 AM
Rob, you misunderstood the presentation. What was stated was that if we fail to fund the Actuarial Recommended Amount it could impact our credit rating so that when we go to borrow, for things already approved (roads, Kids Kingdom, Hucklebury roof, water lines, etc. Not Pension), it could cost the town additional interest. There is no spin here just that you apparently did not understand what was presented. That is good feed back . If someone who pays so close attention did not catch what was actually intended to be conveyed obviously the presentation needs to be more precise.
Steven DeVaux October 19, 2012 at 05:51 PM
The pensions lost money in the best market in 5 years? With this blot on his record it's clear that Malloy couldn't manage a lemonade stand without a lemonade tax.

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