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Cypen & Cypen
NOVEMBER 3, 2011

Stephen H. Cypen, Esq., Editor

1.      HOW MUCH TO SAVE FOR A SECURE RETIREMENT: A new Issue in Brief from Center for Retirement Research at Boston Collegerecognizes that one of the major challenges facing Americans today is how to prepare for a secure retirement. While market ups and downs are unpredictable, people do have control over work and saving decisions that can significantly improve their retirement prospects. The brief uses a simple model to estimate what percent of earnings an individual must save to ensure a financially secure retirement depending on when he starts saving, when he retires and how he invests his retirement savings. First, the brief describes a target replacement rate -- retirement income relative to pre-retirement earnings -- required to maintain pre-retirement living standards. The second section describes the simple model. The third summarizes the results for individuals with average earnings. The fourth section discusses how the results differ for those with lower and higher earnings. And the final section concludes that the age at which one begins to save and the age at which one retires are pivotal decisions in determining the required saving rate and can make the difference between a secure or insecure retirement. Some key findings are 

  • Recent estimates suggest that people need about 80 percent of their pre-retirement income in retirement.  
  • The saving rate needed to hit this target depends on earnings, saving start age, retirement age and asset returns. 
    • An average earner who starts saving at 35 and retires at 67 needs to save 18 percent a year, assuming a 4-percent return.  
    • The comparable rates for low and high earners are 12 percent and 22 percent, respectively.  
  • Starting early and working longer are more powerful levers for gaining a secure retirement than earning higher returns.

November 2011, Number 11-13. 

2.      THREE R’s OF TEACHER PENSION PLANS -- RECRUITMENT, RETENTION AND RETIREMENT: An Issue Brief from National Institute on Retirement Security says that, as early as turn of the 20th century, American legislators seemed to understand the importance of teacher quality to students’ education.  An early-century report on public education noted that a schoolteacher’s work is personal, direct and positive.  It works for good or ill of each pupil. Defined benefit pension plans were first introduced for teachers in the United States to help with the recruitment of high quality educators, and as an incentive to keep those educators in the teaching profession.  By 1916, some form of retirement plan was made available to public schoolteachers in 33 states.  It was thought that such a retirement system might serve two purposes:  (1) bringing more diverse and highly qualified teachers into the profession and (2) creating a more productive workforce that actually saves public employers money, as one dollar in pension benefits was seen as worth more than a dollar in salary. Today, the vast majority of public schoolteachers in the United States participate in a traditional DB pension plan. The report analyzes the effectiveness of pensions on teacher retention and overall teacher productivity, and draws policy conclusions about the ideal design of teacher retirement systems. It finds that: 

  • Teacher effectiveness increases with experience.  Education policy literature finds that teacher productivity increases sharply within the first few years of teaching.  Thus, the more retention that we see among-midcareer teachers, the more that the average teacher productivity within a school will increase. 
  • Cost of teacher turnover is quite high, both in terms of financial cost and loss of productivity to the school district. In addition, public schoolteachers turn over less than private schoolteachers, largely due to their compensation, including pension benefits. 
  • DB pension plans help to recruit high quality teachers, and to retain highly productive teachers longer, as compared with defined contribution accounts. 
  • In 2003, DB pensions helped to retain and additional 22,000 teachers nationwide.  Because longer tenured teachers are more effective teachers, the increased retention that DB pensions bring increases the overall quality of public education. 
  •     Because the cost of teacher turnover is substantial, the retention effects of DB pension plans also saves school districts money.  In 2003, DB pensions saved school districts $273.2 Million nationally in teacher turnover costs. 

DB pensions remain a cost-effective way to increase retention of highly effective teachers in our public schools. Because DB pensions play an important role in retention of highly productive teachers, pensions have the dual benefit of both increasing the overall quality of our public education system while also reducing costs to taxpayers. These findings are particularly important considerations for policymakers given the economic challenges facing states and localities as they attempt to keep taxpayer costs low while improving education for American children. Right-on. 

3.      VOTERS WHO OPPOSE OHIO COLLECTIVE BARGAINING LAW ON THE RISE: The number of Ohio voters who oppose Senate Bill 5 is on the rise, according to a survey reviewed by The Bill would, among other things, require workers to pay at least 15 percent toward their health care and at least 10 percent toward their pensions. Among voters questioned, 57 percent said Senate Bill 5 should be repealed, compared with 32 percent who support the law. Opposition was up from a September poll, in which voters opposed the law by a margin of 51 percent-38 percent. 

4.      SOCIAL SECURITY ANNOUNCES 3.6 PERCENT BENEFIT INCREASE FOR 2012: With the first cost-of-living adjustment since 2009, monthly Social Security and Supplemental Social Security Income benefits for more than 60 million Americans will increase 3.6 percent in 2012. The 3.6 percent COLA will begin with benefits that nearly 55 million Social Security beneficiaries receive in January 2012.  Increased payments to more than 8 million SSI beneficiaries will begin on December 30, 2011. Some other changes that take effect in January of each year are based on the increase in average wages.  Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800.  Of the estimated 161 million workers who will pay Social Security taxes in 2012, about 10 million will pay higher taxes as a result of the increase in the taxable maximum. The Social Security Act provides for how COLA is calculated. To read more, please visit  

5.      LACERS REDUCES EARNINGS ASSUMPTION RATE:  Somewhat as expected, Los Angeles’s biggest public pension fund lowered its anticipated rate of return to 7.75 percent from 8 percent, but said it would implement the change in phases to reduce its affect on the city deficit (see C&C Newsletter for October 27, 2011, Item 8). Los Angeles City Employees’ Retirement System administers pensions for more than 43,000 current and retired civilian employees.  According to, the $10.8 Billion fund returned 22.6 percent for the fiscal year endedJune 30, 2011.  Its investment performance for 10 years was 6.2 percent. A lower assumption rate will require Los Angeles to increase payments to the plan. Implementing it would boost the city’s bill by $22 Million, raising the city’s estimated deficit for the fiscal year that begins next July to $272 Million. The board voted to phase in the new rate over five years, reducing additional cost to the city to $4.3 Million in 2012-2013, and rising to $26.6 Million in 2016-2017. The city threatened to fire 400 employees if the $22 Million increase took effect all at once. 

6.      U.S. SETTLES ANTHRAX LAWSUIT FOR $50 MILLION!: A Florida woman whose husband died in a 2001 anthrax attack will receive $50 Million from the U.S. government, according to UPI. Maureen Stevens of Lantana had sued, alleging lax security at the federal government’s biological weapons research laboratory in Maryland led to the anthrax attack on American Media Inc. in Boca Raton, which killed her husband, National Enquirer photo editor Robert Stevens, and four others. The settlement, which must be formally approved by the U.S. Justice Department, was hashed out in mediation. The trial would have tested FBI claims that the attacks were carried out solely by Bruce Ivins, a researcher at the U.S. Army Medical Research Institute of Infectious Diseases. Ivins killed himself in 2008, just days before he was to be charged in connection with five anthrax-laced letters sent to the National Enquirer, congressional offices in Washington and news organizations in New York City. 

7.      WISCONSIN PUBLIC RECORDS LAW REQUIRES DISCLOSURE OF LAW FIRM’S INVOICES TO COUNTY DEFENSE: The Juneau County (Wisconsin) Star-Times, a twice-weekly newspaper, appealed a circuit court judgment dismissing its complaint against the county for relief under the statutes governing public records in Wisconsin. The parties disputed whether the “contractors’ records” provision applied to invoices generated by the county’s insurance defense counsel. The statute requires disclosure, upon request, of records produced or collected under a contract with a governmental body. The parties also dispute whether information that the county redacted from the invoices is justified by the attorney-client privilege. The circuit court concluded that the statute did not apply to the invoices, and, that, even if it did, the county properly produced the invoices, except as they were necessarily redacted to protect the attorney-client privilege. The appellate court concluded that (1) the statute applied to the invoices as records collected by the insurer under the contract of insurance and (2) the county failed to point to evidence sufficient to survive summary judgment on the question of whether its redactions qualified as attorney-client privileged information. Accordingly, the appellate court reversed and remanded to the circuit court to order the county to make available to the Star-Timesunredacted copies of the invoices. In Florida, we face this issue on a regular basis, but the problem is solvable. Juneau County Star-Times v.Juneau County, Appeal No. 2010AP2313 (Wis. App., Dist. IV, October 27, 2011). 

8.      LAW ENFORCEMENT AGENCIES “VISIT” LOCAL S.EX OFFENDERS:  When Yuma, Arizona, registered sex offenders answered their doors in recent days, it was not trick-or-treaters, but fully armed U.S. marshals. According to, every year, about 30 officers from federal, state and local law enforcement agencies partake in Operation Safe Treat.  The effort was created to ensure that s.ex offenders are in compliance with their registration requirements, and to inform parents of potential risks in their neighborhoods. Officials started the program on Halloween so parents can be mindful and aware that there are sexual predators out there. Because of the holiday, parents can take extra precautions so their kids can be safe while out trick-or-treating. This year, officers visited more than 280 registered s.ex offenders to check registration compliance and to make sure s.ex offenders were not participating in any Halloween activities. They cannot have anything to do with Halloween: they have to have the lights off and no Halloween items or decorations. Perhaps these officials can come to Miami to check under the Julia Tuttle Causeway. 

9.      GOLF WISDOMS: If you really want to be better at golf, go back and take it up at a much earlier age. 

10.    PARAPROSDOKIAN: (A paraprosdokian is a figure of speech in which the latter part of a sentence or phrase is surprising or unexpected in a way that causes the reader or listener to reframe or reinterpret the first part. It is frequently used for humorous or dramatic effect.):    Hospitality: making your guests feel like they're at home, even if you wish they were. 

11.    QUOTE OF THE WEEK: “When you get to the end of your rope – tie a knot in it and hang on.” Eleanor Roosevelt

12.    ON THIS DAY IN HISTORY: In 1948, Chicago Tribune reports: “Dewey beats Truman.” 

13.    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. 

14.    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 Thank you. 




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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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