[Mpls] City pension task force releases recommendations

[David Brauer]

Bill Cullen writes:

> Many corporations, unions and cities across the U.S. are having trouble
with
> their pensions.  A soft stock market will cause this.
> 
> But it seems that Mpls is always on the bad side of every "investment."
Is
> there no planning?  Is there never a risk assessment?
> 
> Is it possible that an expert could tell us about the fiduciary duty our
> leaders have?

[I'm-no-expert disclaimer]

Interesting you should mention this. The returns, by fund, are actually
quite decent. They are managed mostly be pensioner-elected boards - even
though, when the market-driven returns dip too low to fulfill the funding
formulas, the taxpayers have to make up the difference. (In the case of one
city pension fund, the moment an employee retires, the city has to
contribute the actuarially necessary funds for that person's pensions in a
lump sum - instead of 'paying as you go.' If Social Security or any given
corporation had to do this, they'd be broke.)

Interestingly, some of the problems were exacerbated by what seemed like a
good idea at the time. Early retirements seemed good because you could
replace higher-paid workers with lower-paid ones. However, that pushed the
costs from salaries into pensions, where you have a lot less budget
flexibility.

Yes, things like that cause me to wonder about city planning. All I can tell
you, journalistically, is that the city is now much better at
planning/forecasting long-term. When the early retirement decisions were
being made, the city did not make a five-year budget forecast. I think this
is another example of the current regime cleaning up past messes (some that
go back 30 years, some 5-10), without necessarily making more of them.

Here's a question to ponder (you can answer in your own head or on the
list): What do you consider a fair yearly pension for a cop or firefighter
who's worked a full career? No peeking at the report, and if you already
know the answer, remain on the sidelines.

I'll post the answer down the road if no one beats me to it.

David Brauer
Kingfield