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Targeting Pensions and Retirement Savings
A cautionary tale of an Oregon public schools retiree who hired a financial advisor who talked him into cashing out the guaranteed pension and turning the resulting $729,000 into an investment account in his Iris Capital firm. You can guess where the story goes from here… http://www.huffingtonpost.com/james-w-russell/targeting-pensions-and-retirement-savings_b_9189690.html
Column Sums Up Analysis of 401(k) Accounts Falling Woefully Short
LA Times columnist Michael Hiltzik describes a report from the Economic Policy Institute depicting in a series of charts and graphs how 401(k)-type retirement accounts have failed most American workers. Hiltzik includes six of the charts showing how the shift away from defined benefit pensions to 401(k) savings accounts leaves most older workers with meager resources as they face living longer in retirement. Read the LA Times article here: http://www.latimes.com/business/hiltzik/la-fi-mh-six-charts-on-the-retirement-crisis-20160302-column.html. The full report by Economist Monique Morrissey is available here: http://www.epi.org/publication/retirement-in-america/
Report Strongly Indicates 401(k) Investment Returns Lag Due to Fees
In a report published in December, 2015 the Center for Retirement Research studied defined benefit versus defined contribution pension plans from 1990-2012 and concluded that DB plans out-performed 401(k) plans by 0.7 % in investment returns. The report also cited data indicating returns for traditional IRAs were about 1% lower than the 401(k)s. Investment fees were tagged as the main culprit lowering returns. In the conclusion, the report says: “Forgoing returns over long time periods means that assets at retirement will be sharply reduced…” http://crr.bc.edu/wp-content/uploads/2015/12/IB_15-21.pdf
Union Backs Pooled IRA Option for New State Plan
As a new state board, Secure Choice, gets ready to recommend a state-run savings plan later this month that could automatically enroll most small business employees, a large union, Service Employees International Union, is pushing an option that would eventually offset investment losses. Read more: https://calpensions.com/2016/03/07/union-backs-pooled-ira-option-for-new-state-plan/
SDCERA Board Approves COLA for Retired Members
On February 18, 2016, the Board of Retirement approved a 1.5% cost-of-living adjustment (COLA) for retired members. Members with retirement dates on or before March 31, 2016, are eligible for this year’s COLA beginning in the April 2016 benefit payment.
The COLA is based on the Consumer Price Index (CPI) for the San Diego area, which increased by 1.62% over the previous year. The CPI is rounded to the nearest one-half of one percent, resulting in a 1.5% COLA increase for 2016.
The maximum COLA varies by tier – up to 3% for retired Tier I, Tier II and Tier A members, and up to 2% for retired Tier B and Tier C members.