Cypen & Cypen
AUGUST 31, 2006
Stephen H. Cypen, Esq., Editor
1. NEW YORK STATE COMPTROLLER RESPONDS TO PENSION FUND CRITIC:
Alan Hevesi, New York state comptroller, has written an opinion piece in the Binghamton (New York) Press & Sun-Bulletin. In it he addresses claims made by E. J. McMahon, a vocal opponent of public pension funds (see C&C Newsletter for August 24, 2006, Item 4). McMahon wants to make public funds look more expensive than they really are because his goal is to abolish them. The New York State Pension Fund is well funded and will stay that way. Investment professionals agree that the best way to invest to get the best return at the lowest risk is to diversify among stocks, bonds, real estate and other investments. That is just what the state’s pension fund does. McMahon wants the pension fund to earn less so he can say it has a big hole and is too expensive. McMahon’s basic claim is that public pension funds get to take risks that the federal government does not allow for private pension funds. The claim is completely false because public companies are required to report what they would owe if they could only invest in bonds, because that is what would happen if they went out of business and the government took them over. But that is just a number they report. Like public funds, private funds actually invest in stocks. On average, private companies project higher growth in their investments than public pension funds do; simply put, public funds are more conservative. Opponents of public pension funds say they should not invest in stocks because it is too risky. Of course, these same people want to replace all pension funds with individual accounts created to invest in stocks! Because pension funds are large institutional investors, they have access to expertise and opportunities that no individual can possess. Pension funds can spread their money among many different investments in ways that individuals cannot. If pension funds did not invest in stocks, real estate and other types of equity investments as McMahon wants, there would be four very bad results: (1) Public pension funds have $2.5 Trillion in assets. If they sold all their stocks, the price of those stocks would tumble. (2) Companies would have less equity capital for economic expansion and job creation. (3) Wall Street, New York’s major economic engine, would lose money, dramatically hurting New York’s economy. (4) Taxpayers around the state would have to pay much more into the pension fund for no good reason. The whole point of a pension fund is to reduce the cost of providing pensions by investing wisely. It is absurd to suggest that public funds invest with one arm tied behind their backs. So, there.
2. FLORIDA EXPANDS ASSAULT AND BATTERY UPON LAW ENFORCEMENT OFFICERS:
Effective July 1, 2006, the Florida Legislature has expanded Section 784.07(2), Florida Statutes, which deals with assault or battery upon law enforcement officers, firefighters, emergency medical care providers, public transit agent employees or other specified officers. Now, the following individuals will also be covered: a non-sworn law enforcement agency employee who is certified as an agency inspector, blood alcohol analyst or breath test operator while such employee is in uniform and engaged in processing, testing, evaluating, analyzing or transporting a person who is detained or under arrest for DUI and a person licensed as a security officer, wearing a uniform that bears at least one patch or emblem that is visible at all times that clearly identifies the employing agency and that clearly identifies the person as a licensed security officer. Chapter 2006-127.
3. BLS ISSUES NATIONAL COMPENSATION SURVEY ON PRIVATE INDUSTRY EMPLOYEE BENEFITS:
The U.S. Department of Labor, U.S. Bureau of Labor Statistics, has issued its National Compensation Survey on Employee Benefits in Private Industry in the United States. Seventy-one percent of workers in private industry had access to medical care plans, and 52 percent participated in such plans in March of 2006. Sixty percent had access to retirement plans, and 51 percent participated in a retirement plan of at least one type. Fifty-four percent of workers had access to defined contribution plans, and 43 percent participated. Other major findings include
4. “WHEN THE GOOD PENSIONS GO AWAY”:
In his President’s Column written for the Association of Benefit Administrators, Inc.’s “Insights,” Thomas J. Mackell, Jr., drops the following bombshell: it is a fairly safe assumption that defined benefit plans in the private sector have a window of survival of three to five years; in the public sector that window is five to ten years! How did we get where we are? Dr. Mackell lists a number of factors that have contributed to this state of affairs, including:
The result? -- freezing of corporate pension plans, or, worse, termination or default thereof; public sector budget cuts with attendant pressure to discontinue defined benefit plans; and, in the multi-employer arena, initiatives to eliminate defined benefit plan obligations in the collective bargaining process. However, as our readers know, Dr. Mackell never presents problems without also presenting solutions. Here is his top ten list:
Growing inequality poses a threat to our democratic society. If we ignore that fact, we must ask ourselves this question: How many more gated communities can we build before those on the outside demand to come in?
5. WELL, THEY BOTH DO BLOW UP, DON’T THEY?:
According to The Associated Press, Chicago
prosecutors say a 29-year-old man traveling with his mother
desperately did not want her to know he had packed a sexual
aid for their trip to Turkey. So, he told security it was
a bomb. The man was stopped by officials after guards found
an object in his baggage that resembled a grenade. When
officers asked him to identify the item, the young genius
said it was a bomb. He later told officials he lied because
his mother was nearby and he did not want her to hear that
it was part of a penis pump. He was charged with felony
disorder conduct, and faces up to three years in prison.
If he does go to the big house, he better pray that the
other inmates are only pumping iron.
“Everybody is ignorant, only on different subjects.” Will Rogers
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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.