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Cypen & Cypen
August 13, 2020

Stephen H. Cypen, Esq., Editor

The funded status of a typical corporate pension plan experienced a decrease in funded status in July, with plans that hedge interest-rate risk faring better than total-return plans. The funded status for a typical total-return plan declined by 2.0%, while an LDI-focused plan saw a modest increase of 0.5%, based on NEPC's hypothetical open- and frozen-pension plans. Gains were driven primarily by the continuing rally in equities, mitigated by increases in liabilities as Treasury rates and credit spreads declined.
The funded status of the total-return plan dropped by 2.0%, as investment gains were offset by losses fueled by lower interest rates and contracting credit spreads, leading to an uptick in liabilities.
The LDI-focused plan increased by 0.5% in funded status as gains from risk and hedging assets offset the increase in liabilities. The plan is currently 75% hedged, as of July 31.  Click here to download NEPC’s Pension Funded Status Monitor.  NEPC, www.nepc.com, August 6, 2020.
A survey of U.S. public pension fund CEOs and executive directors found that all 34 systems had business contingency plans in place that "generally worked well" when the COVID-19 pandemic broke out in February, resulting in "very few ... significant problems," according to data released by Funston Advisory Services, a governance consulting firm.
Fully 90% of the funds surveyed in the second half of July said they shifted to virtual board meetings mostly through video conferencing, although some conducted meetings by conference calls or a combination of telephone and video conferencing.
That said, 64% of pension fund CEOs/EDs said the existing contingency plan worked "very well' with minimal difficulties for virtual board meetings. That compares with 94% of CEOs who said existing contingency plans worked well for general administration, 88% for benefits administration; investment department, 86%; external communications, 82%; information technology, 76%; and employee communication, 73%.
In the report, Funston said many respondents expect to continue virtual board and committee meetings, most likely via a combination of phone and video conferencing, though 44% said it was "too soon to tell" how future meetings would be conducted.
As for investments, 50% of the plan officials surveyed said their teams have been making "tactical adjustments" in some asset classes; 38% said the board had reviewed the plan's asset allocation without making changes; and 24% said their fund accelerated some new investments under consideration before the pandemic outbreak while 12% said they delayed new investments which had been under review.  Christine Williamson, Pension & Investmentswww.pionline.com, August 10, 2020.
A bill pending in the Maine legislature would create a public-private partnership to promote individual retirement savings accounts.
State Senator Eloise Vitelli (D-Sagadahoc) introduced LD 594 on Feb. 5, 2019. It was referred to the Senate Committee on Health Coverage, Insurance and Financial Services.  Even those with differing views on the measure roughly agreed in their testimony to the committee regarding what the bill would require.
State Treasurer Henry Beck said this: “My read of the legislation is generally as follows: Employers who do not happen to offer retirement savings options must automatically enroll employees (who may opt out) to send withheld income to a state entity that oversees the investment of funds to in low fee options. A competitive procurement process would be used for other administration and investments by private sector actors.”
And David Clough, Maine State Director of the National Federation of Independent Business (NFIB), noted: “As proposed, LD 594 would apply to all employers that do not offer a federally qualifed retirement plan, and require all of those employers to offer its employees the opportunity to contribute to the state-sponsored plan through payroll deductions.” He continued, “Mandatory offer would require small employers to maintain explanatory literature and forms for an employee to sign up. The employer would go through this process with each new hire and perhaps annually for employees who have opted out from participation.”
LD 594 provides that the plan must:

  • Allow an eligible employee in Maine to contribute to an account established under the plan through payroll deductions.
  • Require an employer to offer its employees the opportunity to contribute to the plan through payroll deductions unless the employer offers a qualified retirement plan, including, but not limited to, a plan qualified under Internal Revenue Code Sections 401(a), 401(k), 403(a), 403(b), 408(k), 408(p) or 457(b). 
  • Provide for automatic enrollment of employees and allow employees to opt out of the plan.
  • Have a minimum or default contribution amount. 
  • Offer default escalation of contribution levels that can be increased or decreased within the limits allowed by the Internal Revenue Code.
  •  Provide for contributions to the plan to be deposited directly with any investment administrator for the plan. 
  • Whenever possible, use existing employer and public infrastructure to facilitate contributions to the plan, record keeping and outreach.
  • Require the maintenance of separate records and accounting for each plan account.
  • Provide for reports on the status of plan accounts to be provided to plan participants at least annually.
  • Allow for plan account owners to maintain their accounts regardless of place of employment and to roll over funds into other retirement accounts.
  • Pool accounts established under the plan for investment.
  • Be professionally managed.
  • Provide that the state and employers that participate in the plan have no proprietary interest in the contributions to or earnings on amounts contributed to accounts established under the plan.
  • Provide that any investment administrator for the plan is the trustee of all contributions and earnings on amounts contributed to accounts established under the plan.
  • Keep administration fees in the plan low.
  • Allow the use of private sector partnerships to administer and invest the contributions to the plan under the supervision and guidance of the board.
  • Allow employers to establish an alternative retirement plan for some or all employees.

LD 594 provides that the plan may not:

  • Require an employer to contribute to an employee's plan account.
  • Impose any duties under ERISA.
  • Guarantee any rate of return or any interest rate on any contribution.

The bill also would create the Maine Retirement Savings Board within the Office of the Treasurer of State to develop and maintain a defined contribution retirement plan for persons employed for compensation in Maine and to conduct a market and legal analysis of the plan.
Opinions Vary
Beck expressed strong support for the measure. “The need to encourage and facilitate private savings for retirement is self-evident,” wrote Beck in a letter to the committee.
Clough expressed concern over the effect the requirements would place on those who run small businesses. “Most small employers do not have human resource professionals to handle personnel matters; the owner typically handles these duties--along with handling many other aspects of operating a successful small business. Because the owner has finite time and resources, any new obligations may increase the stress of being an employer and increase the risk making errors. The owner also would be required to arrange and pay for automatic payroll deductions,” he wrote.
Clough noted that the NFIB Maine members “expressed strong opposition” to the requirement that they mandatory offer a state-sponsored retirement account to their employees. They certainly did--to the tune of 84%. Just 10% said they support the provision.
And while he said he supports the bill, Beck nonetheless suggested that the process of passage and adoption be deliberate. “I encourage the Committee to proceed slowly with the LD, allowing time for study,” he wrote.
Both Beck and Clough suggested looking to the example that states that have put such plans in place have set. Beck noted “California, Oregon and Illinois (as well as other states) are undertaking similar efforts” and asked, “What can we learn from Oregon especially?” Clough noted that some states--notably Massachusetts, New York and Vermont--have made it optional for employers to offer a plan, and that New Jersey and Washington have created virtual marketplaces through which small employers can give their employees access to private retirement plans.
The Senate Committee on Health Coverage, Insurance and Financial Services reported the bill to the Senate on Aug. 4, 2020; a majority of the committee members said that the bill should pass as amended.  John Iekel, ASPPA, August 6, 2020.
Concerns about saving enough for retirement and Social Security running out of money were present even before the pandemic, but new survey results show that those fears are becoming even more amplified among consumers.
The Nationwide Retirement Institute conducted two surveys (a COVID-19 flash poll on Social Security and the firm’s seventh annual Social Security survey) during and before the pandemic began. It found that well over a third of Americans (38%) say their retirement plans have been impacted, with the most common responses being that they will have to retire later than planned (19%) or won’t be able to retire at all (10%).
And while many retirees receive Social Security as a source of retirement income, COVID-19 has adults across generations (61%) even more worried than before about Social Security running out of funding. In fact, 63% of respondents think it is more important now than it was before to optimize Social Security and more than one in four who are eligible for Social Security (28%) say the pandemic has caused them to change their decision on when to file for benefits.
“Americans are facing complex retirement scenarios as a result of the COVID-19 pandemic and market volatility,” says Tina Ambrozy, senior vice president of Strategic Customer Solutions at Nationwide. “On top of this, adults across generations lack a basic understanding of Social Security benefits and ways to maximize those benefits.”
Funding Problems
In fact, even before the pandemic, Nationwide found that a majority of adults worried Social Security would run out of funding in their lifetimes (79% Millennials, 81% Gen Xers and 66% Baby Boomers). Millennials are especially skeptical about Social Security funding--44% of Millennial respondents believe they will not get any of the Social Security benefits they have earned, compared to 35% of Gen Xers and 10% of Boomers.
Millennials (67%) and Gen Xers (61%) are also more likely than Boomers (51%) to believe there will be Social Security cuts under the current administration and be concerned about those cuts (71% of Millennials, 68% of Gen Xers and 55% of Boomers). In addition, many believe they will need to continue working because Social Security won’t pay enough (75% of Millennials, 72% of Gen Xers and 48% of Boomers). 
The findings also suggest that a better understanding of Social Security is needed because large percentages of respondents across generations do not have a firm grasp of how the program works. Common misconceptions and uncertainties include:
The (incorrect) belief that if adults claim benefits early, their benefits will go up automatically when they reach full retirement age --only 45% of Millennials, 49% of Gen Xers and 69% of Boomers correctly identify that this statement is false.
Nearly all Millennials (97%), most Gen Xers (90%) and four out of five Boomers (80%) incorrectly identify the age at which they are eligible for full benefits.
Fewer than 1 in 10 adults know all the factors that determine the maximum benefit (4% of Millennials, 6% of Gen Xers and 7% of Boomers).
Half or more say they do not know how much of their income will be replaced in retirement by Social Security (49% of Millennials, 49% of Gen Xers and 57% of Boomers).
Eager to Learn
Given this lack of knowledge, most are open to learning more about Social Security--particularly Millennials (94%) and Gen Xers (92%), compared to Boomers (84%). Among the generations, 29% of Millennials, 25% of Gen Xers and 13% of Boomers would prefer to talk with a financial advisor to learn more about Social Security.
Furthermore, most adults who either work with a financial advisor or plan to ask one about Social Security (86% of Millennials, 93% of Gen Xers and 74% of Boomers) say if the advisor could not show them how to maximize their Social Security benefits, they would find one who could.
“With so much uncertainty, many people are looking for help in identifying ways to take better control of their finances. In fact, in an April poll we found that one in four adults (24%) say they have reached out to a financial professional for the first time as a result of the pandemic,” Ambrozy noted.
Nationwide’s COVID-19 Social Security survey was conducted online by the Harris Poll between May 15-19, 2020, among 2,026 adults aged 18 and over within the U.S. The seventh annual Social Security survey was conducted Feb. 19-March 6, 2020, among 1,727 U.S. adults age 24 or older who currently collect or plan to collect Social Security benefits.  Ted Godbout, ASPPA, August 11, 2020.
Funding ratios for corporate pension plans fell slightly in July as market returns could not keep pace with an increase in liabilities, according to reports from Northern Trust Asset Management and Mercer.
According to Northern Trust, the average funding ratio for S&P 500 companies with defined benefit plans fell to 79.1% in July from 80% the month before. Global equity market returns were up about 5.3% during the month, while the discount rate decreased to 1.94% from 2.28% for the month ended July 31, leading to higher liabilities.
"This divergence in asset vs. funded ratio performance reinforces the importance to monitor both asset and liability growth," said Jessica K. Hart, senior vice president and head of the outsourced CIO retirement practice at Northern Trust Asset Management, in a news release.

Meanwhile, Mercer said the estimated aggregate funding level of pension plans sponsored by S&P 1500 companies decreased by 1 percentage point to 79% in the month ended July 31 because of a decrease in discount rates to 2.2% from 2.57% that was partially offset by an increase in equity markets.
The estimated aggregate deficit of pension fund assets of S&P 1500 companies totaled $557 billion as of July 31, up $64 billion from the end of June.
"With rates continuing to drop, additional pension funding relief is looking even more attractive to plan sponsors faced with large increases in contributions over the next few years," said Scott Jarboe, a partner in Mercer's wealth business, in a separate news release. "Unfortunately, debate continues in Congress over the next round of COVID-19 relief legislation and at this point there's no guarantee pension funding relief will be included this round."  Rob Kozlowski, Pension & Investmentswww.pionline.com, August 4, 2020.
Employers’ efforts to comply with the Families First Coronavirus Response Act (“FFCRA”) were further complicated when the United States District Court for the Southern District of New York invalidated several key provisions of the Department of Labor’s (“DOL”) Final Rule (or regulations) interpreting the law.  Unfortunately, the Court’s holding creates a number of questions on key issues, including retroactivity and the applicability of the decision on a nationwide basis in light of the court’s failure to issue a nationwide injunction.  Further, the holding may not be final, because the DOL may appeal the ruling to the Court of Appeals for the Second Circuit.  At minimum, it appears likely that the DOL will issue revised Questions & Answers, and potentially revised regulations, in light of the ruling.
As we await further guidance from the DOL and/or the courts, employers should become familiar with the changed FFCRA landscape and consider how the ruling may impact their FFCRA policy and practices.  Below is a discussion of the four provisions that have been struck down, at least within the Southern District of New York.
The FFCRA statutory language provides that employees are only entitled to leave if they are unable to work “because of” a COVID-19 qualifying reason.  The DOL interpreted this language to mean that employees are not entitled to FFCRA leave if their employer has no work available for them, even if the lack of work is the result of a government directive such as a closure or “stay-at-home” order.  Noting that this “work-availability requirement” is “enormously consequential” in that it may considerably narrow the scope of individuals entitled to leave, the Court invalidated the requirement, finding that the DOL’s interpretation did not reflect reasoned decision-making.
With the work-availability requirement no longer in place, it is unclear how FFCRA leave will apply going forward with respect to various employer responses to work slowdowns or closure orders.  For example, will furloughed employees – who currently do not even count as “employees” under the DOL’s FFCRA regulations – be eligible for FFCRA leave if the decision to furlough them is based on a closure order?  As COVID-19 cases increase, creating the potential for new or renewed government directives concerning the workplace, additional guidance from the DOL on this point is imperative.
Health Care Provider
The FFRCA statutory language permits employers to exclude health care providers from taking FFCRA leave.  Although the statute references the definition of “health care provider” set forth under the Family and Medical Leave Act (“FMLA”), the DOL adopted a much broader definition of “health care provider” in the FFCRA regulations, stating that employers could choose to deny leave to, among others, essentially anyone employed by a hospital, doctor’s office, health care center, clinic, etc. (“Medical Institution”) or anyone employed by an entity that contracts with a Medical Institution to provide services or maintain facility operations.
Again, recognizing that the DOL’s interpretation could significantly restrict the scope of employees entitled to take FFCRA leave, the Court agreed with the State of New York that the DOL’s definition of “health care provider” was far too broad, especially since it would cover employees whose roles bear “no nexus whatsoever” to the provision of healthcare services and thus are not relevant to the healthcare system’s vitality during the pandemic.  After the ruling, the question remains as to whether a “health care provider” for purposes of exclusion from FFCRA leave is limited to those individuals who satisfy the FMLA’s limited definition, or if the DOL may identify a new, albeit more limited, definition of this phrase.
Intermittent Leave
The FFCRA statutory language is silent as to whether employees may use FFCRA leave intermittently.  In the regulations, the DOL provided for intermittent use of leave, but only: (1) in certain situations where the use of leave intermittently would not create a risk of exposure in the workplace (such as when an employee taking FFCRA Paid Sick Leave due to COVID-19 illness could telework rather than come in to the workplace, or when the employee’s need for leave is based on the need to provide care to a child whose school is closed); and (2) with employer consent.  In the ruling, the Court upheld the regulation as it relates to the types of leave that may be used intermittently, but struck down the requirement of employer consent.

As such, it appears that, in those situations where intermittent FFCRA leave is generally permitted under the regulations, employers must permit employees to take such leave intermittently.
The FFCRA statutory language provides that employees must provide notice of the need for leave either “as soon as practicable” or no later than the first day after such leave is taken.  In contrast, the DOL’s regulations required not only that employees request leave ahead of time, but also that employees submit supporting documentation ahead of the leave.  Given the regulations’ conflict with the text of the statute, the Court struck down the advanced documentation requirement.  As a result, employers should not require the submission of documentation as a precondition to taking FFCRA leave.  Revised DOL guidance as to the timing of such documentation hopefully will be forthcoming.
While the full extent of the ruling – and its geographic reach – are as yet unknown, employers can expect to see an increase in demand for FFCRA leave as the number of COVID-19 cases continues to rise.  As such, employers should work with legal counsel to determine how, if at all, their FFCRA policies must be revised in light of the decision and any revised DOL guidance.
Oklahoma Law Enforcement Retirement System, Oklahoma City, reported a preliminary net return of 1.65% for the fiscal year ended June 30, falling well short of its policy benchmark of 4.7%.
The results were disclosed in an investment report posted on the pension fund's website.  The $997 million pension fund also missed its benchmark on a three-, five- and 10-year basis. For the three, five and 10 years ended June 30, the pension fund returned an annualized net 5.1%, 5.2% and 8.2%, respectively, compared with their respective benchmarks of 6.6%, 6.6% and 8.9%.
The fund returned a net 4.5% for the fiscal year ended June 30, 2019.  U.S. large-cap equity was the pension fund's top-performing asset class for the current fiscal year, earning 5.4%, followed by fixed income, cash, real assets and global long/short equities, which returned 4.3%, 1.7%, 1.5% and 1.4% respectively. Non-U.S. equities and U.S. small-cap equities performed poorly with respective returns of -1.1% and -4.9%.
As of June 30, the actual allocation was 59.6% equities, 27.8% fixed income, 10.6% real assets, and 2% cash and equivalents. The target allocation is 60% equities, 25% fixed income and 15% real assets.  Pension & Investmentswww.pionline.com, August 11, 2020.
8.  FLORIDA'S ECONOMY TAKES $23B HIT FROM EMPTY CRUISE SHIPS, PORTS:Tourism in Florida has taken a big hit due to the coronavirus pandemic. The losses are especially bad in the cruise industry. 
The Centers for Disease Control and Prevention issued a no-sail order for cruise ships in March. Major cruise lines like Carnival and Norwegian have cancelled sailings through the end of October.  
“We have the top three cruise ports in the world," said Doug Wheeler, CEO of the Florida Ports Council. (Miami, Port Canaveral, and Port Everglades are the top three. Port Tampa Bay ranks lower, serving about one million passengers a year). "So for them to effectively overnight lose a substantial portion of their revenues, that makes it tough for a lot of decisions that have to be made relative to capital projects and staffing and planning and so forth.”
The Ports Council says the loss of cruises, along with a slowdown in cargo traffic, has led to a $23 billion loss for Florida’s economy.   The state’s ports are asking for financial help from Congress, but it isn’t clear if that money will be included in the next round of pandemic relief.  Bradley George, WUSF News, www.wusf.org, August 10, 2020.
Florida’s ports are asking for help from the federal government for heavy losses related to the cornavirus pandemic.
Since March, cargo traffic at Florida’s ports has slowed down and cruise ships have sat empty. The Florida Ports Council estimates 169,000 jobs were lost due to the pandemic, and the total economic impact is $23 billion.  That includes people supporting cruise and cargo activity and those connected to maritime transportation.
“The seaports have previously not been included in any of the what seem like now several relief packages that have come from Congress or out of (Washington) D.C.,” said Ports Council CEO Doug Wheeler.
Wheeler said sea terminals have been left out of previous coronavirus relief packages, and that needs to change.  "We’re asking from a nationwide standpoint for about $3.5 billion and we're looking at about $1.5 billion of that being directly for seaports themselves nationally," he said. "With the additional $2 billion being used for just general maritime sector businesses.”
The assistance would help support the more than a dozen ports in Florida, include ones in Tampa and Manatee County.  The House passed a rescue package for ports in July, but the Senate hasn’t taken up the bill.  In a letter to Senators Mitch McConnell (R-Kentucky) and Chuck Schumer (D-New York), the Ports Council urges the Senate to take action.  Bradley George, WUSF News, www.wusf.org, August 6, 2020.
The brief’s key findings are:

  • Roughly one quarter of state and local workers are not covered by Social Security and get their disability insurance (DI) from their current employer.
  • To compare these state and local DI programs to Social Security, the Center created a new dataset - for public use - on eligibility standards and benefit provisions.
  • The analysis finds that most state and local DI programs provide relatively generous protection.
  • Specifically, these programs require only that workers are incapable of performing their current job, while Social Security requires inability to perform any job.
  • And they provide most long-tenured employees - those most at risk of experiencing a disability - with higher benefit replacement rates.

Download the full brief here.   Anek Belbase and Laura D. Quinby, Center for Retirement Research at Boston College, https://crr.bc.edu/, August 2020.

The current recession shows an odd pattern among older workers. Unlike in prior recessions, the unemployment rate is higher among older workers than among younger ones. Many keep looking for work, because they have little or no savings, when in the past they would have retired.
The unemployment rate is especially high among workers 65 years old and older. Their unemployment rate averaged 10.8% from March to June 2020. In comparison, the unemployment rate for those 55 to 64 years old was 9.0% and it was 8.6% for those 45 to 54 years old. Unemployment rates usually go down as age goes up, but not in this recession.
These differences reflect a longer-term trend of older people working longer, especially among those 65 years old and older. The prolonged labor market expansion from October 2010 to February 2020 gave many people job opportunities, including those who usually encounter particularly high hurdles to finding work. The employment-to-population ratio of workers age 65 and older (averaged over 12 months to smooth out seasonal fluctuations) grew from a low of 16.2% in June 2009, when the Great Recession ended, to 19.7% in February 2020, just before the pandemic began. Thus continued a decades-long trend of growing employment among older workers that started in 1985, when on average less than 11% of people age 65 plus had a job. In February 2020, their employment-to-population ratio was at its highest level since 1961. Furthermore, over the past four and a half decades, the share of people age 65 and older, who worked, almost doubled. The share of older worker out of the total labor force went up even more as the share of people 65 years old and older also increased. Older workers’ employment grew because of more jobs for them in an aging society.
The lack of savings plays a large part in older workers working longer. In the past two decades, for instance, the average retirement age has gone up among those with little savings, while it has actually fallen among those with a lot of wealth. For those people with jobs at age 65 or older in 2019, almost one-in-five were working part-time in order to supplement their retirement income. Working longer offered a solution to the retirement crisis for many older workers.
But that solution evaporated when the recession hit. From 2019 to 2020, half of all job losses among workers 65 years old and older happened to people who had been working part-time for reasons related to their retirement income, even though this group only represented about one fifth of workers age 65 plus in 2019. That is, people who had worked to supplement their retirement income lost jobs at two and half times the rate of their employment share in the span of a few months.
Confronted with such massive job losses, older workers can choose to retire or to keep looking for a new job. The unemployment rate data already suggest that older workers in particular chose to stay in the labor market and look for a new job, given that the unemployment rate only includes those looking for work and is especially high among older workers in this current recession.
Since older workers now tend to stay in the labor market longer than in past recessions, we would expect this to affect Social Security benefits. In the past, older workers may have chosen to retire early upon losing their jobs in a recession. Yet, retiring before reaching full retirement age means accepting permanently lower Social Security benefits. For this reason, average Social Security benefits quickly dropped in past recessions before eventually growing again (see figure below).

This time, older workers often keep working and, therefore, average Social Security retirement benefits increased, rather than stalled, for the first four months of the recession.  Early retirement does not seem to be an attractive option for many who lost their jobs, because they need the extra income to make ends meet. With insufficient savings for retirement, they may also be more wary of accepting the lower Social Security benefits that come with early retirement, even if they struggle to find work.
The retirement crisis is playing out right before our eyes. Many older workers kept on working to supplement meager savings, amid high health care costs, widespread debt and caregiving responsibilities for family members. With temporary job losses turning increasingly permanent, many older workers will eventually leave the labor market for good and face a less than golden retirement. Christian Weller, Forbeswww.forbes.com, August 4, 2020.
As the ongoing coronavirus pandemic continues to present health and economic challenges, it is difficult to focus on anything other than the present. It’s important, though, not to lose sight of the years ahead and to take steps that can put you in a better position when we emerge on the other side.
The youngest baby boomers -- the generation born between 1944 and 1964 -- turned 55 last year. This, coupled with the uncertain job picture, means many of us are thinking more seriously about what we will need to successfully retire.
In the past, the years leading up to retirement have been a time of hope and optimism. We’ve looked forward to fulfilling our dreams of doing the things we might have missed while working, such as dedicating more time to family and friends, checking items off a bucket list, or even pursuing a meaningful second career.
However, many of the traditional assumptions about this phase of life have been challenged over the past decade, including the idea that we’ll retire at 65. In fact, MetLife’s Evolving Retirement Model Study found nearly one in 10 workers (9%) never expect to retire. Many of us are choosing to continue working and, in light of the current situation, some who have already retired, especially those in health care, are even being asked to return to work.
What’s behind this change? It turns out that it’s more than just the current market volatility. Perhaps one of the most significant reasons is the decline in company-financed pensions. Many companies have shifted from defined benefit, or pension, plans, which promise retirees a monthly income benefit for life, to defined contribution (DC) plans. DC plans, such as 401(k)s, are the main source of retirement savings for most workers.
While employers often make contributions to these plans, workers are primarily responsible for their retirement security. With this in mind, there are three key steps you can take now to prepare for the years after you finish working regardless of whether that day is decades away or just over the horizon.
Create a plan to eliminate debt.
Whether you carry a balance on a credit card, have student loans or a mortgage, start paying off your debts now. Reducing your monthly expenses not only allows you to save more for retirement, but also gives you more flexibility with how you spend money after you stop working.
Make retirement savings automatic, and don’t miss out on “free money.”
Many employers offer a retirement savings plan, such as a 401(k), to their employees. The sooner you begin saving, the sooner your savings can begin to build up over time. Help your nest egg grow even faster by contributing enough to take full advantage of any matching contributions your employer offers. For example, your company might match 100% of your contribution, up to 6% of your salary. In other words, if you earn $50,000 a year and save at least $3,000, your company will match that amount by contributing $3,000 to your retirement as well.
Understand how your retirement savings translates into income.
Take the time during your working years to understand how much income you might receive in retirement based on your retirement savings. The U.S. Department of Labor offers a simple retirement income projection tool that can help you get started. If you see that projections are falling short of where you think you might need them to be, consider filling the gap by increasing the amount you are saving. Additionally, if you are over the age of 50, you can make catch-up contributions to your 401(k) or individual retirement account.
MetLife’s Study also asked workers and retirees the age of the oldest person they know. On average, that person is almost 85 years old, and 45% of survey participants believe they’ll live that long too. Many of us can, therefore, expect to live 20 years – or more – in retirement, and we’ll need our savings to last. The question is: Will we be able to enjoy a comfortable and secure retirement, especially during periods of market turmoil like we are experiencing now?
Having a predictable income can make a big difference and fortunately relief may be in sight. While many employers don’t yet offer guaranteed retirement income options in their 401(k) plans, a new law passed at the end of 2019 could change this. That’s good news, considering that 95% of workers and retirees say it’s important for retirees to have a source of guaranteed retirement income they cannot outlive.
MetLife’s Study was conducted online with 1,518 U.S. adults ages 33-75 who are either employed full time or retired and have access to a defined benefit or defined contribution plan through their current employer or the employer from which they retired. Data were weighted, where necessary, to align with actual population proportions. The Study was conducted by The Harris Poll between Aug. 19 and Sept. 6, 2019.  Philadelphia Sun, www.philasun.com, August 7, 2020.
In February, before a pandemic and resurgence of the Black Lives Matter movement changed daily life in America, 14 Spokane Police Department recruits entered the Basic Law Enforcement Academy.
The class was not only the largest group to enter the academy in decades but also one of the most diverse.
Getting such a group of recruits was a challenge, said Sgt. Jake Jensen, who oversees hiring and training in his role as SPD’s assistant training director.
More than half of police departments across the country have seen a significant decrease in the number of applicants they receive, according to a study by the Police Executive Research Forum. In 2019, the Washington Association of Sheriffs and Police Chiefs launched the Wear the Badge campaign to promote open law enforcement positions in the state and encourage individuals to apply.
In a February interview, Jensen said that while the number of applicants has changed, the core of what he looks for in a potential officer has stayed the same.

“The motivational piece,” Jensen said, or why someone wants to become a Spokane Police officer, is important. He added they look at a potential recruit’s educational and work background, and make sure there has been enough time between “the party day that most of us have when we’re teenagers and where they’re sitting in front of us now.”
It’s also important for them to relate SPD’s core values of “compassion, integrity and professionalism” to their own lives, Jensen said.  It helps if officers are excited to be involved with the community. Jensen said SPD has put a focus on an “ over-the-top kind of community involvement.”
“We try to keep progressive because it kind of supports the legitimacy of our job,” Jensen said. “When the public doesn’t support you, then you’re kind of out there on your own.”  Before being hired, potential officers must complete public safety testing and be interviewed by the department where they’re hoping to work . After officers are hired, they’re turned over to Officer Steve Perry, the department’s field training coordinator, before entering the academy.
Twice a year, the Washington State Criminal Justice Training Commission, or CJTC, operates a satellite academy at the Spokane Police Department’s training center.  The class, including 14 SPD trainees, was 19% female, 16% people of color, 30% veterans and 30% older than the age of 30 at the start of the academy.
Typically, the academy lasts 19 weeks. But this year, due to COVID-19, CJTC took a five-week break. SPD recruits continued to train in their small group while their classmates from other agencies did not. The class was able to reunite after three weeks.
Then on May 25, George Floyd was killed by Minneapolis police officers. His death sparked protests and riots nationwide, including in Spokane.
The academy was able to finish, but with the close contact that defensive tactics training requires, recruits still had to complete 80 hours of training before starting work in their Field Training Car, which Perry likens to “an internship.” After four months of mentoring in an FTO car, these 14 officers will be on their own policing the streets of Spokane.
With a pandemic interrupting their training, changes in public perception of policing and the major life change of becoming a law enforcement officer, these new officers have a lot to navigate. Here are three of their stories: 

A.J. Ussery, 29, hopes to bring all his life passions, from basketball, psychology, to helping the homeless, into one career by becoming a Spokane Police Officer.  Ussery grew up in California playing basketball, which at 6-foot-8 was a fitting choice. Ever since he was a child the sport sparked passion for him, Ussery said. As a teen, things were harder, and he spent a year homeless.
“Once you go down that alley and once you get into the predicament, it’s hard to get out of,” Ussery said. “You go through depression and anxiety and all that stuff so being able to self -soothe with alcohol and drugs and all these addictions that people get … it’s really hard to pull yourself out of.”
Ussery said he luckily did not deal with addiction, but experiencing homelessness gave him a greater understanding of that struggle. After getting back on his feet, Ussery graduated high school and received a full ride athletic scholarship to Point Loma Nazarene University in San Diego, where he studied psychology.
“At first I chose psychology because it was supposed to be the easiest degree and I wanted to concentrate on basketball,” Ussery said. “Then I realized it helped me interact with people, get to know how people thought.”
He spent about six months in the NBA D-League, but Ussery said the business side of attempting to play professionally soured him on basketball.  So, Ussery figured he would put that psychology degree to use. He started work in a mental health treatment facility for 13- to 17-year-olds before moving to another facility for children with high IQs that came from group or foster care situations.
“I loved working with the kids but after a while you realize that it’s really hard to work with kids,” Ussery said.  He said felt “ill equipped” but didn’t want to go back to school for a master’s degree in psychology so he began thinking about working in law enforcement. While working in the facilities, Ussery met several probation officers along with others in law enforcement and felt like it would be a good fit. He moved to Spokane and got a job in corrections.
A big part of why Ussery wants to work in law enforcement is because, as a Black officer, he hopes to change people’s perspective, he said at the beginning of academy.

“I just want people to be able to see a familiar face and look at it and not see it in a negative light,” Ussery said. “I think police officers a lot of times get the least benefit of the doubt instead of more benefit of the doubt.”  After a little over a year working in corrections, Ussery said he decided SPD was the place for him. As a corrections officer, Ussery interacted with officers from every law enforcement agency in the area.
“The reason I chose the city is just because of interactions with a lot of city officers and the way they act,” Ussery said, adding they gave the impression of working well together, being family oriented and staying positive even in difficult circumstances.
After being selected, Ussery said he felt relieved but also ready to learn.  As the only Black man in the class, Ussery said he does feel like race is “a huge” topic.  “I think all humans are created equal so color shouldn’t really matter,” Ussery said. “I think that if more people of color started to join law enforcement and you saw them going out into the community, it would be very helpful to see that.”
However, Ussery also said he doesn’t feel there is “racial tension” between all officers and Black people.  “Every single time I’ve been stopped by a cop before this experience, I’ve never had issues. I’ve never had problems. I respect them,” Ussery said. “Everybody is going to be the same in ways and everybody is going to be different in ways.”
Before the death of Floyd, Ussery said he felt there wasn’t any real solution to race in policing until “the perspective of society” changes.  “I want to make sure that eventually you’re not seeing a color,” he said. “Eventually you’re seeing just a man with a badge who is there to help you.”
The rest of academy was a lesson in adaptability with COVID-19 and civil unrest.  “That’s pretty much what our job is, adaptability,” Ussery said of the break in instruction. “We got more in -depth, the 14 of us were able to get together and have some instructors actually give us some more in -depth teaching that we probably wouldn’t have got with being in the academy.”
When it comes to the renewed discussion of systemic racism when it relates to policing, Ussery said he just doesn’t know yet how it will affect his job day to day.  “A lot of this, I guess it’s hard to tell what you’re going to get,” Ussery said. “Some people don’t like cops, some people do. I just want to treat everybody fair and equally and treat everybody with respect, the way they should be treated.”
Ultimately, graduation was a moment to celebrate for Ussery. His wife, Maxine, who is a dispatch operator, pinned her husband’s badge on his chest and the couple shared a look of accomplishment.  Ussery is excited to get involved in department programs like the Police Activities League, which typically focuses on sports along with other activities, as a way to engage with area youth.
“I mean that’s what I did all my life was sports,” Ussery said. “That’s a huge, major way that I’ve always given back.”  While the world is a bit crazy right now, Ussery said he is exciting to be making progress toward being a full -fledged police officer.
“I’m excited to get to the next process,” Ussery said, of heading to his field training car. “It has been a long time.” 

Britton Ballard, 23, has always wanted to be a police officer.  “I’ve wanted to be a police officer since I was 6 or younger, just ever since I could remember,” Ballard said. “I always wanted to protect people, help people, those sort of things, be somebody that people can look up to.”
Ballard grew up in Spokane with a large family. As the youngest of the family, Ballard watched his older brothers get into some trouble.  “My brother, one of them, you know, he’s been in jail and he deserves to be there,” Ballard said.  Another one of his brothers also had a run in with the law but has since turned his life around with the help of his arresting officer, Ballard said.
“The officer that arrested him kind of flipped his whole life around,” Ballard said. “He went from gang violence and drugs – everything – to having been clean and sober for six years.”  Ballard saw his brother turn his life around and even thank the police officer who arrested him.
“I want to be able to change someone’s life for the better whether that be saving their life or just kind of guiding them in a new direction,” Ballard said.  After graduating from Mead High School at 17, Ballard took a year of community college classes before enlisting in the Marine Corps.
There he was an infantry squad leader, and after four years, Ballard decided it was time to be closer to family.  “I loved the Marines I served with. The Marine Corps itself there were some things I was a fan of and some things that I wasn’t,” Ballard said. “I missed my family so I decided to come back.”  Once at the police academy, Ballard was selected by training staff to be class president, despite being one of the youngest in the group of 36 classmates.
Ballard attributes his leadership ability to not only his time in the Marines but the respect he gives those around him.
“I think everything just comes with a general respect,” Ballard said. “I show you respect you show me respect.”
He said he also had to accept responsibility for the group’s shortcomings.  “Everything bad that happens is going to be my fault,” Ballard said.  “Everything good that happens is going to be what comes of everybody working together.”
Then five weeks into academy COVID-19 separated the class. Trainees from the Spokane County Sheriff’s Office and other regional law enforcement agencies were sent home and SPD recruits continued training on their own.
The class remained close despite the separation with Ballard frequently checking in with everyone.  “I think we’re a really close class so I don’t think it was as hard as it could have been,” Ballard said.
By the time the class reunited five weeks later, Ballard and the other SPD recruits were ahead in the curriculum but relished the opportunity for additional instruction.
“It was nice in a way that we had already done things that they were about to have to do,” Ballard said of the returning students. “It did help me have a better understanding of knowledge of the information because now I wasn’t only having to learn it, take a test on it and know it, but I was having to teach it, which kind of gives you a better understanding of it.”
Class did look different though. Defensive tactics instruction, which requires close physical contact between students, was largely suspended. Trainees were split up into three groups and received instruction at different times but it was Ballard’s job to keep them all connected.
He spent the weeks apart replying to numerous group chats while continuing his training with the SPD recruits.  During that time, civil unrest spread across the country following the killing of George Floyd.  Ballard delved into the shift in public opinion on police officers during his speech at the class’s graduation.

“When I was little, people would tell me all the great things about being a police officer … then the narrative is changed,” he said in his speech. “Now people tell me that it is a corrupt job, a brutality job, a racist job. They asked me, are you sure you want to be a police officer in this new climate? I think most of my classmates, if not all, would agree with me when I say, yes.”
For Ballard, that speech and graduation day was something he had waited for his whole life.  “I’m just excited to uphold those values that our police department has created and show the world that we’re here to do what we say and what we swear to,” Ballard said.  After he finished his speaking, Ballard’s father, Scott Ballard, pinned his badge on his chest. Ballard turned to hug his dad with a massive smile on his face.
Trisha Lemming, 36, or Trish as her classmates call her, was the smallest in her class at the police academy but had one of the biggest hearts.  Lemming spent years as a stay-at-home mom home-schooling her four children in the West Central neighborhood.
In the summer of 2017, Lemming had an experience that pushed her to change her whole life and become a cop.
Lemming befriended a neighbor and their children would often play together in the neighborhood.  After a few months, Lemming started to see some concerning signs that the mother was on drugs. She contacted Child Protective Services, who already had an open case.
“We’ve had a couple drug houses on our block that it’s tough to deal with, but I guess I’m really open with my kids,” Lemming said. “I talked to them about the heartbreak as we watched a kid get removed from his home that we had become close to.”
That heartbreak was a motivator for Lemming, who loves her neighborhood.  “I love West Central,” Lemming said. “We have so many amazing neighbors.”
Not long after the incident with CPS, Lemming saw Officer Stephanie Kennedy taking photos of stolen property in West Central. A group of kids had gathered around the officer and were fervently asking her questions, Lemming recalled. Kennedy patiently answered the children, giving them a positive interaction with police, Lemming said.  That night Lemming went home and asked her husband, Scott, what he thought of her becoming a police officer. He was beyond supportive, Lemming said.
“I wanted to make a difference,” Lemming said. “Just seeing what’s going on in our city, seeing drug problems and crime, seeing the heartbreak from all that – I kind of had that light bulb moment, why not me?”
Lemming began doing research into the Spokane Police Department’s hiring process and realized she would have to go back to school. She began taking general education classes at a local community college, working out, and training in Krav Maga.  “I needed to be OK with people being in my bubble and punching me,” Lemming said.
After two years of preparation, Lemming was hired by SPD and started at the academy in February.
“It was very surreal and I just couldn’t believe it,” Lemming said. “I worked toward it and it was like, ‘Oh my gosh, this is really happening.’”  Starting at the academy meant putting her children into public school for the first time while her husband worked at the Spokane Regional Emergency Communications Center.
“It’s going to be hard for sure, especially with four kids,” Lemming said, during the first week of academy. “They’re starting to feel that a little bit.”
Then five weeks into the academy, COVID-19 caused significant changes. Rather than continuing to learn as a regional class, SPD students continued on together, awaiting the return of their classmates.
“It was kind of a mix of feelings,” Lemming said. “It’s weird when not just us but the world was shutting down, so that was very uncertain but going into this career you kind of just have to have the go with it kind of attitude.”
Weeks later, as nationwide protests against police brutality and systemic racism grabbed people’s attention. Lemming and her classmates watched from the sidelines as their soon-to-be coworkers tear -gassed people in downtown Spokane.
The protests brought calls to defund the police and shift to a more community-oriented policing strategy . For Lemming, someone who got into policing to help her community watching the protests was another heartbreak.
“The whole thing was heartbreaking to me, just across the board watching our nation go down that road again and me wanting to go into this career field and help people,” Lemming said. “Sometimes people will see the badge unfortunately and not see me and unfortunately some people have tarnished the badge. So, I absolutely think there are going to be people that I have to prove myself to, and I don’t have a problem with that.”
However, Lemming said she believes in SPD and their approach to policing. She hopes to eventually become a neighborhood resource officer and remain connected to the community she loves.  LEO Affairs, https://leoaffairs.com/ August 6, 2020.
This is the second of two tips exploring the IRS Dirty Dozen tax scam list. Tax scams tend to rise during tax season or during times of crisis. Scam artists are using the COVID-19 pandemic to try to steal money and information from taxpayers.
Taxpayers should watch out for these scams.
Scammers targeting individuals with limited English proficiency: IRS impersonators and other scammers are targeting groups with limited English proficiency. These scams are often threatening in nature. Phone scams pose a major threat to people with limited access to information, including individuals not entirely comfortable with the English language.
A common one remains the IRS impersonation scam where a taxpayer receives a telephone call threatening jail time, deportation or revocation of a driver's license from someone claiming to be with the IRS. Recent immigrants often are the most vulnerable to these scams. They should ignore these threats and not engage the scammers.
Dishonest return preparers: Taxpayers should avoid so-called "ghost" preparers who expose their clients to potentially serious filing mistakes as well as possible tax fraud and risk of losing their refunds. Ghost preparers don't sign the tax returns they prepare for taxpayers. They may print the tax return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost preparer will prepare but not digitally sign as the paid preparer.
With many tax professionals affected by COVID-19 and their office locations potentially closed, taxpayers should be especially careful to select a credible tax preparer.

Offer in Compromise mills: Taxpayers need to be cautious of misleading tax debt resolution companies that can exaggerate chances to settle tax debts for "pennies on the dollar" through an Offer in Compromise. Dishonest companies oversell the program to unqualified candidates so they can collect a large fee from taxpayers already struggling with debt.
These scams are commonly called OIC "mills," which cast a wide net for taxpayers, charge them pricey fees and churn out applications for a program they're unlikely to qualify for.
Fake payments and repayment demands: A con artist will steal a taxpayer’s identity and bank account information. Then the con artist will file a false tax return and will have the refund deposited into the taxpayer's bank account. Once the direct deposit hits the taxpayer's account, the fraudster places a call to them, posing as an IRS employee. The taxpayer is told that there's been an error and that the IRS needs the money returned immediately or penalties and interest will result. The taxpayer is told to buy specific gift cards for the refund amount.
Payroll and HR scams: Tax professionals, employers and taxpayers need to be on guard against phishing designed to steal Form W-2s and other tax information. These are called Business Email Compromise or Business Email Spoofing. These scams have used a variety of tactics including requests for wire transfers or payment of fake invoices.
Ransomware: This is malicious software that is often downloaded by the user after clicking on a malicious attachment that encrypts their data making their data inaccessible. In some cases, entire computer networks can be affected. The IRS and its Security Summit partners have advised tax professionals and taxpayers to use the free, multi-factor authentication feature being offered on tax preparation software products. IRS COVID Tax Tip 2020-97, www.irs.gov, August 5, 2020.
Now is a good time for people to begin thinking about next year’s tax return. While it may seem early to be preparing for 2021, reviewing your recordkeeping now will pay off when it comes time to file again.

Here are some suggestions to help taxpayers keep good records.  Taxpayers should develop a system that keeps all their important information together. They can use a software program for electronic recordkeeping. They could also store paper documents in labeled folders.

Throughout the year, they should add tax records to their files as they receive them. This includes Notice 1444, Your Economic Impact Payment, and unemployment compensation documentation. Having records handy makes preparing a tax return next year easier.

  • Taxpayers should notify the IRS if their address changes. Taxpayers should let the IRS know if they change their address. They should also notify the Social Security Administration of a legal name change to avoid a delay in processing their tax return.
  • Review their tax return to make sure they didn’t overlook any credits or deductions. Double check credits and deductions.  Records that taxpayers should keep include receipts, canceled checks and other documents that support income, including any unemployment compensation.
  • Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for figuring gains or losses.
  • Taxpayers should keep records for three years from the date they filed the return. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.

IRS.gov has several tools taxpayers can use to stay updated on important tax information that may help with tax planning. People can also download the IRS2Go app, watch IRS YouTube videos and follow the agency on social media.

More information:  Publication 5349, Year-Round Tax Planning is for Everyone.  IRS Tax Tip 2020-100, www.irs.gov, August 11, 2020.

So what if I don't know the meaning of the word 'apocalypse'? It's not the end of the world.

17.  EVER WONDER?:  
Why is it that Doctors call what they do 'practice'? 

"Life can only be understood backwards; but it must be lived forwards." -Soren Kierkegaard

On this day in 1923, US Steel Corp initiates 8-hour work day.


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