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Miami

Cypen & Cypen
NEWSLETTER
for
January 2, 2014

Stephen H. Cypen, Esq., Editor

1. CALIFORNIA CITY CANNOT REDUCE EMPLOYEE PENSIONS, DESPITE REFERENDUM APPROVAL: California law prohibits the city of San Jose from reducing pensions of city employees, even though reductions have been approved by voters, but it can cut its workers’ salaries to pay for higher retirement costs, under a judge’s ruling reported by newyorktimes.com. A Santa Clara County Superior Court Judge ruled that San Jose, the third largest city in the state and the self-described capital of the Silicon Valley, could not make its employees pay an additional 16% from their pockets toward their pensions or switch to a less generous plan. However, the ruling endorsed voter approved cuts to wages and some health benefits that are expected to save the city money. 
 
2. AMERICAN ACADEMY OF ACTUARIES EXPLAINS WHY PBO ESTIMATES CONFLICT: Conflicting estimates of public pension plan obligations are drawing increased public scrutiny, but a new Issue Brief released by the American Academy of Actuaries Pension Practice Council explains to public policymakers, pension plan participants, pension plan administrators and taxpayers what is often behind seemingly contradictory estimates. Part of understanding how well funded, or how underfunded, a pension plan is involves examination of the method used to select the interest rate for discounting benefits and the trade-off between certainty and risk included in that rate. The new Issue Brief puts the difference into perspective to help stakeholders have a productive dialogue about how best to address the financial security of pensions. The Issue Brief explains:
 

  • How the use of different discount rates can lead to different estimates of an obligation.
  • That the solvency value is the amount needed to fulfill all benefit obligations with certainty, and is measured using the rate of securities free of default risk, usually U.S. Treasury securities.
  • That the budget value is the amount expected to be sufficient if invested in a diversified portfolio, which can contain stocks and other riskier assets.

 
Understanding these different measurement methods is an important, since potential federal and state legislation may include provisions related to pension measurement. The pension measurement Issue Brief is part of a larger American Academy of Actuaries’ initiative to help legislators, regulators and other stakeholders at the federal, state, and local levels understand the nature of pension risks and the complex issues surrounding public pension plans. In July 2012, the Academy published the issue brief, “The 80% Pension Funding Standard Myth,” offering fuller criteria for judging the actuarial soundness of a pension plan. (See C & C Newsletter for August 9, 2012, Item 1).  
 
3. WAYS TO IMPROVE YOUR FINANCIAL SITUATION: Employee Benefit Research Institute brings us ten things to check off of your 2013 list and to get our 2014 list off to a strong start:
 

 
4. UNUSUAL HOLIDAY GIFTS FROM CO-WORKERS: Employers and colleagues spread holiday cheer this season with bonuses and parties, as well as some unusual Christmas, Hanukkah and New Year’s gifts. Nearly half of employers say they will give holiday bonuses this year, on par with last, according to CareerBuilder's annual holiday survey. Employers are also in the gift giving spirit as one-third will bestow gifts on their staff, and bosses can expect gifts from one-fifth of their employees. In some cases, generosity may have been better spent on well wishes than these ten bizarre holiday presents co-workers have gifted:
 

  • Camouflage toilet paper. Our thought: a waste of money for color blind people.
  • Plaster cast of a co-worker’s hand.  Our thought:  this gift should be barred by the statue of limitations.
  • Painted concrete chicken.  Our thought: finger stickin’ good. 
  • Stamps.  Our thought: what’s the problem?  After all, we live in a mail dominated world.
  • Homemade laundry detergent.  Our thought: joy to the world.
  • A toothpaste squeezer.  Our thought: for youtube? 
  • A talking fly swatter.  Our thought: it all depends on whether the fly you are talking to has a zipper or buttons.
  • A unicorn calendar.  Our thought: you’ll see green alligators and long necked geese, some humpty back camels and some chimpanzees, some cats and rats and elephants, but sure as you’re born, you’re never gonna see no unicorns.
  • A hand-painted porcelain clown dressed in silk clothes.  Our thought: send in the clowns. Don’t bother, they’re here.
  • 50 pounds of fresh Louisiana shrimp.  Our thought: because of the BP Oil Spill, they probably are 50 shades of grey.

 
5.  ENLIGHTENED PERSPECTIVE BY ANDY ROONEY: I have learned... that life is tough, but I am tougher.
 
6.  CLEVER SIGNS: Sign on the back of septic tank truck: "caution - this truck is full of political promises"
 
7. TODAY IN HISTORY: In 1966, 1st Jewish child born in Spain since 1492 expulsion.  Hard to believe

8. KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources.
 
9. PLEASE SHARE OUR NEWSLETTER: Our newsletter readership is not  limited  to  the   number  of  people  who  choose  to  enter  a  free subscription. Many pension board administrators provide hard copies in their   meeting   agenda.   Other   administrators   forward   the   newsletter electronically to trustees. In any event, please tell those you feel may be interested that they can subscribe to their own free copy of the newsletter at http://www.cypen.com/subscribe.htm.

 

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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