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Cypen & Cypen
February 22, 2018

Stephen H. Cypen, Esq., Editor

The EBRI/Greenwald & Associates Health and Workplace Benefits Survey (WBS) examines a broad spectrum of health care issues, including workers’ satisfaction with health care today, their confidence in the health care system and the Medicare program and their attitudes toward benefits in the workplace. It is co-sponsored by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates with support from six private organizations. A total of 1,518 workers in the United States ages 21–64 participated in the survey. The data are weighted by gender, age and education to reflect the actual proportions in the employed population. A current EBRI Notes article identifies the key findings of the 2017 survey:
· Health care most critical issue: Workers rank health care as the most critical issue in the nation. In 2017, 31 percent of workers rank health care as the most critical issue in the United States. And more concretely, 60 percent of workers report that health insurance is extremely important when considering whether to stay in or choose a new job, whereas only 42 percent report that a retirement savings plan is extremely important.
· Health care system poor or fair: In 2017, a majority of workers (55 percent) describe the health care system as poor (25 percent) or fair (30 percent).
· Confidence about the health care system is mixed and declines looking into the future: Workers’ confidence about specific aspects of the health care system overall is mixed and falls the further out into the future one looks. o For example, 45 percent of workers indicate they are extremely or very confident about their ability to get the treatments they need today, only 34 percent are confident about their ability to get needed treatments during the next 10 years, and just 26 percent are confident about this once they are eligible for Medicare. o Similarly, 30 percent of workers say they are confident that they are able to afford health care without financial hardship today, but this percentage decreases to 26 percent when they look out over the next 10 years and to 23 percent when they consider the Medicare years. Notes
· Confidence in workers’ own health plans remains high: Workers tend to be more favorable about their own health plans than they are about the health care system overall. One-half of workers with health insurance coverage are extremely or very satisfied with their current health plan. Workers are generally confident that their employers or unions will continue to offer health insurance in the future. Nearly two-thirds (63 percent) of workers report that they are extremely or very confident.
· Workers concerned about cost: Workers’ dissatisfaction with health insurance is focused primarily on cost: just 22 percent are extremely or very satisfied with the cost of their health insurance plan, and only 18 percent are satisfied with the costs of health care services not covered by insurance. Approximately one-half of workers (48 percent) report having experienced an increase in health care costs in the past year, about the same percentage as in 2016 and 2015, but down from 61 percent in 2013.
· Workers satisfied with quality: Workers are generally satisfied with the quality of medical care received. One-half of workers (49 percent) say they are extremely or very satisfied with the quality of the medical care they have received in the past two years, 33 percent are somewhat satisfied, and 13 percent are not too (8 percent) or not at all (5 percent) satisfied.
· Workers’ views since 2016: Workers’ opinions about the health care system and their own health care have not changed since 2016. This suggests that the underlying reasons for workers’ concern about health care are fundamental and not swayed by the current political debate.
· Rising health care costs has implications for financial wellbeing: Of the one-half of workers reporting cost increases, 26 percent state they have decreased their contributions to retirement plans, and 43 percent have decreased their contributions to other savings. More than one-quarter also report they have had difficulty paying for basic necessities such as food, heat, and housing, while 36 percent say they have had difficulty paying other bills. Nearly one-third say they have used up all or most of their savings or have increased their credit card debt, 22 percent report that they have borrowed money, 27 percent have delayed retirement, 19 percent have dropped other insurance benefits, 15 percent have taken a loan or withdrawal from a retirement plan, and 13 percent have purchased additional insurance to help with expenses.
Employee Benefit Research Institute, January25, 2018, Volume 39, No.1
Some pension reforms made to the $2.8 billion Baltimore City Fire & Police Employees Retirement System in 2010 were ruled unlawful by Baltimore Circuit Judge Julie Rubin. In 2014, a federal appeals court upheld the reforms, but left the door open for further challenges under a different legal argument. In 2012, Judge Marvin Garbis declared the change unconstitutional in U.S. District Court in Baltimore, but the 4th U.S. Circuit Court of Appeals in Richmond, Va., vacated that decision, saying the active and retired workers' constitutional rights were not impaired by the disparate treatment, but instead were a "mere breach of contract" for which the plaintiffs could seek remedy under state law. Reforms implemented in 2010 by then-Mayor Stephanie Rawlings-Blake increased employees' contributions and replaced a variable benefit tied to investment returns with a tiered cost-of-living increase. Instead of annual increases that averaged 3% under the variable benefit, the 2010 pension reforms created a tiered COLA that gave older retirees 2% increases, while retirees under 55 did not receive an increase. In the latest ruling, issued Jan. 2, Judge Rubin said the variable benefit change was a breach of contract. She said Maryland common law prohibits the city from retrospectively modifying the plan if the changes would diminish or impair benefits for people retired or eligible to retire before the changes were made. The plaintiffs "held vested rights to plan benefits that the city could not lawfully unilaterally diminish or impair," the order said. The ruling does not address changes affecting active workers not yet eligible for benefits. Judge Rubin noted that "the city is entitled to make prospective and reasonable unilateral modifications to the plan." A court date for resolving related issues has not been set. Pensions & Investments reported on the above.
Colorado Fire & Police Pension Association, Greenwood Village, filed a class-action lawsuit against nine banks, including six Canadian banks, over alleged rate manipulation. The banks engaged in "unlawful conspiracy to increase the profitability of their derivatives trading business by manipulating the Canadian dealer offered rate," an interest rate benchmark, between 2007 and 2014, according to the lawsuit, which was filed on Jan. 12 in U.S. District Court in New York. The lawsuit, which alleges violations of the Sherman Act (a U.S. antritrust act), Commodity Exchange Act and the Racketeer Influenced and Corrupt Organizations Act, names the Bank of Montreal, Bank of America Merrill Lynch, Deutsche Bank, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, HSBC Holdings, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank as defendants. "Defendants profited by suppressing CDOR because it reduced the amount of interest owed under CDOR-based derivatives contracts with investors," according to the lawsuit. Specifically, the $4.7 billion Colorado pension fund "paid more or received less" than it should have on more than $1.2 billion in CDOR-based derivatives transactions as a result of the banks' alleged CDOR suppression, the lawsuit said. Between 2007 and 2014, the six Canadian banks held more than $1 trillion in CDOR-based swap contracts with U.S. counterparties, the lawsuit said. The lawsuit added that it is not the first time the defendants have been accused of manipulating financial benchmarks, noting that Bank of America Merrill Lynch, Deutsche Bank and HSBC have already collectively paid about $4.4 billion in fines over claims they manipulated at least 11 financial benchmarks, including the U.S. dollar London interbank offered rate, the Japanese yen LIBOR and the euro interbank offered rate, among others. Royal Bank of Canada continues to face litigation risk from LIBOR-rigging investigations, according to Bloomberg Intelligence. In the wake of allegations that global banks had rigged the LIBOR benchmark in the U.S. and Europe, Canadian regulators took steps to prevent any potential manipulation of the rate in 2014. The Canadian Office of the Superintendent of Financial Institutions said in 2014 that it would begin supervising the governance and controls surrounding the banks' CDOR submission process and outlined expectations for their work, including providing rates in a consistent manner. Spokesmen for the pension fund, BofA and CIBC declined to comment. Spokesmen for the other banks could not immediately be reached for comment.
Center for Retirement Research at Boston College (CRR) has released a new issue brief.The last comprehensive review of locally adminstered plans in this series found that their funded status – as of 2011 – lagged behind that of state pension plans. Yet much has happened in the public pension landscape since. Plans administered at both the state and local levels have passed a spate of reforms to control rising pension costs and to limit liability growth. The brief uses the most recent data available – from 2015 and 2016 – to assess the current status of local plans. The discussion proceeds as follows. The first section briefly describes the universe of local plans and the sample of plans used in this study. The second section compares trends in the funded status for state and local plans. While local plans have historically trailed states, their funding gap is slowly closing.3 To understand this pattern better, the third and fourth sections examine two key determinants of the funded status: required contributions and investment returns. The final section concludes that although local plans have paid more of their actuarially required contributions than state plans, relatively poor returns limited their ability to close the gap in the past. More recently, however, local plans have experienced higher actual returns relative to state plans, in part, due to a smaller allocation to alternative investments. As a result, the gap in funded status between the two groups is shrinking. Here is the conclusion:

          Since 2001, local plans have trailed states in funded level. While local plans receive more of their actuarially required contributions and tend to set more stringent required contributions, poor investment returns have historically limited their ability to close the gap with states. But, in recent years, local plans have experienced stronger returns than state plans, shrinking the funding gap between the two. More research is needed to fully understand this recent reversal. While the findings of this brief highlight the impact of investment performance on funding, the amount of the actuarially required contribution paid – and the way the required contribution is calculated – is also important. If the required contribution is based on less aggressive funding methods, a plan receiving 100 percent of its required amount may not realize meaningful improvement in its funded status in the short term. For this reason, it is important that state and local plans evaluate their funding policies and consider incorporating more aggressive funding methods that pay down unfunded liabilities faster. This shift would expedite funding progress when returns are strong and could serve as a safeguard in the event of poor returns.
Center for Retirement Research at Boston College, Numbers 58, January 2018
The average funded status of the largest U.S. corporate pension plans rose an estimated 2 percentage points in 2017 to 83% as of Dec. 31, the highest level since 2013, and up from 81% at the end of 2016, Willis Towers Watson said. "Strong stock market performance throughout the year and robust employer contributions to their pension plans helped to boost funded status to its highest level since 2013 after several stagnant years," said Matthew Siegel, a senior consultant, in a news release. "Several plan sponsors contributed more to their plans last year than originally expected, most likely in response to rising Pension Benefit Guaranty Corp. premiums and growing interest in derisking strategies, and potentially in anticipation of lower future corporate rates from tax reform." "The improved funded position occurred even though pension discount rates finished the year down approximately 50 basis points from the beginning of the year," Mr. Siegel added. According to Willis Towers Watson, assets rose an estimated 7.5% over the year to $1.43 trillion while liabilities increased an estimated 4.2% to $1.72 trillion. Investment returns averaged 13% in 2017. By asset classes, domestic large-cap equities returned 22%; domestic smidcap equities, 17%; long corporate bonds, 12%; long government bonds, 9%; and aggregate bonds, 4%. Regarding company contributions, Willis Towers Watson estimated that companies contributed $51 billion to their pension funds in 2017, almost double the amount required to cover benefits accrued over the year, and up from the $43 billion companies contributed in 2016. Willis Towers Watson analyzed data from 389 Fortune 1000 companies with a fiscal year ended Dec. 31.
The New York City Retirement Systems will take steps to divest from fossil-fuel companies, city Comptroller Scott Stringer and Mayor Bill de Blasio said Wednesday. The pension system, which has five pension funds and five separate boards of trustees, has about $5 billion in fossil-fuel investments in more than 190 companies, according to a joint news release from the comptroller and mayor. New York City Retirement Systems has $189 billion in assets. The pension system will "maintain iTs fiduciary responsibilities" in exiting fossil-fuel investments, Mr. Stringer, who is the pension system's fiduciary, said at a news conference. "A stronger economy rests on a greener planet." The divesting process is complex, he added. "There are many moving parts." The comptroller and mayor will submit formal requests to the five boards of trustees. Messrs. Stringer and de Blasio or their representatives are trustees on each of the five pension boards. Daniel Zarrilli, Mr. de Blasio's senior director for climate policy and programs, said at the news conference that pension fund trustees representing teachers and public employees already have expressed a willingness to explore fossil-fuel divestment. The Teachers' Retirement System and the Employees' Retirement System hold about two-thirds of the fossil-fuel-related assets, he said. As of Oct. 31, the teachers' pension fund had $69.55 billion in total assets and the employees fund had $63.3 billion. Although the comptroller's bureau of asset management makes investment recommendations for the five pension plans within the city system, the respective boards of trustees must vote to divest fossil fuels. The trustees must ask the bureau to conduct a study on divesting fossil-fuel assets and "advise the trustees as to the anticipated impact on the risk and return characteristics of the portfolio," the joint release said. "The trustees will also seek legal opinion as to whether carrying out the divestment would be consistent with trustees' fiduciary duties to beneficiaries." If they get the legal approval, the trustees will instruct the bureau to divest the assets according to specified guidelines and timetables. "In the case of this divestment, transactions would likely be carried out in stages in order to reduce transaction and implementation costs," the news release said. Mr. Zarrilli said the divestiture process could take until 2022. At the news conference, Mr. de Blasio also said the city has sued five publicly traded fossil-fuel companies in federal court, branding them "the central actors" in climate change and saying the city was asking for "billions of dollars" in damages. The companies are BP, Chevron, ConocoPhillips, Exxon Mobil and Royal Dutch Shell. "It's time for them to start paying for the damage they have done," he said.
Inside This Issue
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8. NEW OFFICE ADDRESS: Please note that Cypen & Cypen has a new office address: Cypen & Cypen, 975 Arthur Godfrey Road, Suite 500, Miami Beach, Florida 33140. All other contact information remains the same.
Heroes: What a guy in a boat does.
The most difficult thing is the decision to act, the rest is merely tenacity. –Amelia Earhart
Two hats were hanging on a hat rack in the hallway. One hat said to the other, ‘You stay here, I’ll go on a head.’
On this day in 1821, Spain sells (east) Florida to United States for $5 million.
Almonds are a member of the peach family.
In Florida, you better drink a lot of caffeine or get plenty or rest before getting your hair done, because if you should nod off, you could be subject to a fine. What is more, the salon owner could also get hit with a fine as well. We get that, it is important to make sure you pay proper attention to your ‘do.


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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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