Benefits April 30, 2012

Bills Mandate Study of State Plan for Private Employees

April 30, 2012 (PLANSPONSOR.com) – Connecticut legislators introduced bills that would mandate a study about whether state government should offer a retirement plan to employees without an employer-sponsored plan.
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Under the proposed legislation, an 11-member task force would study the availability of retirement plans and trends in retirement savings, as well as the projected needs of future retirees, according to The CT Mirror. The study panel would include representatives from the governor’s budget office, other constitutional officers, the state Commission on Aging, and experts in the field to be appointed by legislative leaders and Gov. Dannel P. Malloy. 

Council 4 of the American Federation of State, County and Municipal Employees is trying to rally support for the bills, but one of the key lawmakers behind the proposal, Sen. Edith G. Prague, conceded late last week that the chances of passage this year are poor with the legislature scheduled to adjourn in less than two weeks.  

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According to the news report, the state’s chief business lobby, the Connecticut Business and Industry Association, opposes the study, arguing it would harm the private financial services industry and expose taxpayers to financial risks.  

Teresa Ghilarducci, director of The New School’s Schwartz Center for Economic Policy Analysis (SCEPA), rejected those arguments and said a state-run investment plan ultimately would bolster the private financial services sector, just as Social Security did nearly 80 years ago (see “Proposal Suggests Giving Private Workers Access to State Pensions”).  

In Massachusetts, legislators recently approved a bill allowing nonprofit entities, which represent about 14% of the state’s workforce, to access retirement savings plans managed by the state treasury (see “MA House Approves Non-Profits’ Use of State Retirement Plans”). 

Products April 30, 2012

Consultant Urges Review of Pension Operating Model

April 30, 2012 (PLANSPONSOR.com) - Beacon Consulting Group has released "The Evolving Pension Operating Model."
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The report points out that pension funds and endowments are no longer able to operate under old models, and must transition to the industry standard investment manager operating model used by many retail and institutional investment advisers. This transformation will have an impact throughout the pension fund’s organization—from the investment committee to the plan’s participants.  

Beacon explained that pension funds continue to experience a period of unprecedented transformation. A number of factors such as budget cuts, volatile financial markets, and increasing scrutiny by stakeholders have contributed to pension organizations reevaluating their operating environments and external relationships.   

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“Pension fund managers may be assuming unnecessary risk and missing out on cost savings if they have not recently reviewed and streamlined their operating model,” said Frank Strauss, principal at Beacon. “An operational review allows investment managers to simultaneously achieve two critical goals: manage operational risk and reduce costs.”  

A copy of the report can be obtained at http://www.beaconcgi.com.

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