Retirement News

Retiree Healthcare Bill — Alums should be interested in a recent bill to establish a 12-member task force to study and report on ways to provide affordable and reliable healthcare for retired public employees. The bill would impose a one year moratorium on any changes that would reduce health care insurance benefits or increase the cost for retired public employees. To get more actively involved or learn more about this bill, click here for additional information from the PEF Website.

The "No-Inflation" Hoax —Think the Consumer Price Index fails to reflect the true U.S. inflation rate at a severe cost to retirees and others? So does Kevin Phillips, click here for "Washington's Great 'No-Inflation'
Hoax."

Public Pension Fund Actuaries — Public pension fund actuaries are coming under renewed scrutiny and in some cases being sued for their overly optimistic projections of pension fund costs. Click here to read more.

Pension Fund Exam Released; Governor & Comptroller Propose Pension Fund Reforms — On December 12, 2007, the NYS Insurance Department announced the release of a Report on Examination of the New York State and Local Employees Retirement System. On the positive side, the audit recommends increased employer contributions. On the negative, the exam is as of March 31, 2001 and was completed in July 2005. No explanation was provided in the press release regarding the delay in the audit's release. The report is available on the Department's Web site. At the same time, the Department announced that Governor Spitzer, State Comptroller Thomas DiNapoli and Insurance Superintendent Dinallo have proposed a new set of state pension fund regulations designed to improve efficiency, protect the pensions of one million government employees, and help restore confidence in the governance of the $154.5 billion New York State Common Retirement Fund. See the Department's Web site for more information.

New York's Pension Fund Appears Fully Funded; Health Benefits a Different Story — On Dec. 18, 2007, the Pew Center released a report, Promises with a Price, on U.S. public pension systems, the first such 50-state analysis of its kind. The report notes that although states have set aside enough to to cover about 85% of their long-term pension costs, these same states have only reserved about 3% of the funds needed for promised retiree health care and other non-pension benefits.

All told, states have thus far set aside about $2 trillion to meet their long-term obligations. But they still need, according to the study, another $731 billion — a conservative figure that does not include all costs for teachers and local government employees.

NYSID alums will be interested in the New York portion of the study, which indicates that New York faces bigger bills for retiree health and other non-pension benefits — nearly $50 billion for state employees — than all but a few other states, and yet it is one of the five largest states that has not set aside any money to cover these long-term costs.

The state paid $934 million in 2006 to cover the health care benefits of current public sector retirees. These costs have been would been four times greater had the state fully funded these health benefits (pay for the benefits as they're earned by employees), as it does in its pension system.

On the pensions side, New York officials say internal calculations show the system to be fully funded, but the state's current accounting methods do not generate a funding ratio, unlike more common methods used by other states. This will change as New York adjusts to a new standard from the Governmental Accounting Standards Board that requires the use of one of the more common methods. As a result, NYSID alums should be able to better determine whether New York really has the money to adequately fund our pensions (actuaries take note).

For the full study, go to www.pewtrusts.org/news_room_ektid32368.aspx

Governor Spitzer Vetoes Health Insurance Parity Bill — The Office of Management Confidential Employees (OMCE) reports that Governor Spitzer vetoed S.6030 and a similar bill (S.6031-A) in August 2007. The bills sought to prohibit the diminishment of a public sector retiree's health insurance coverage or employer contributions without a corresponding diminishment for active employees.

The legislation sought to protect state retirees cutbacks in health benefits. In his veto message, Governor Spitzer recognized that the legislation sought to advance a "laudable" goal, but was concerned that the legislation would have an adverse impact on numerous affected employers.

In his veto message, the Governor directed the Division of the Budget, the Commissioners of Health, Insurance and Civil Service, and the Director of the Governor's Office of Employee Relations to work with employee and retiree organizations to investigate these issues, and to report back on the potential impact of these bills and other possible legislative proposals.

We'll keep you posted on any developments in this important area. Click here for the complete veto message (26 Kb Word document).

Update: The New York Post ran a scathing op-ed piece (and editorial) on May 12, 2008 about the proposal. For the op-ed piece, click here. For the
editorial, click here.

News from RPEA — If you're retired from the Department and interested in more news about state and federal programs that affect you, check out the Web site of the Retired Public Employees Association, www.rpea.org.

In particular, RPEA's November-December 2007 newsletter reports that reimbursement of the entire Part B Medicare premium is required for enrollees in the New York State Health Insurance Program. If you overpaid, you may be entitled to a reimbursement. Stew Keir reported that checks should have been mailed out starting some time in April or May. RPEA (and this site) will keep you posted regarding how Medicare enrollees can file for a premium reimbursement. (You have to enroll in RPEA to receive their newsletter, but it's free and well worth it.)