Benefits February 24, 2011

MS Pension System Agrees to Delay of State Contribution Increase

February 24, 2011 (PLANSPONSOR.com) - At the Legislature's request, the Mississippi Public Employees' Retirement System board has approved a six-month delay on a requested $53.6 million hike in state contributions.
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The Jackson Clarion-Ledger reports that doing so will save the state general fund about $17 million in fiscal 2012 and also will save counties and cities millions of dollars next year in their share of the employer contribution.  

According to the news report, in October, the pension board voted to approve an increase in the employer contribution rate from 12% to 12.93% at the prompting of an actuary, who blamed the needed hike on several years of market losses and benefit enhancements passed in the late 1990s that are straining the system. Last year, lawmakers voted to raise the contribution rate for employees from 7.25% to 9%.  

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Governor Haley Barbour had called for skipping this year’s increased pension payment altogether, citing a need for an examination into why the state pension system, year after year, requires millions of additional taxpayer dollars.  

Treasurer Tate Reeves, calling it a “fiduciary responsibility” to fund benefits approved by the Legislature, was the only member to speak against the proposal at the full meeting of the board. “Delaying our obligations only puts more pressure on future contribution rates, potentially harming the long-term health of the fund and shifting the burden of paying benefits to future generations,” Reeves said in a statement issued after the vote, according to the Clarion-Ledger.  

The retirement system’s investment earnings were up more than 14% in fiscal 2010 and topped 20% in the first seven months of the current fiscal year, through January 31. The pension system owes retirement benefits to some 247,000 public employees and retirees, including state workers, teachers, police officers, judges and municipal and county employees, the news report said.
Benefits February 24, 2011

Merit Increases Rebounding from Recession

February 24, 2011 (PLANSPONSOR.com) - U.S. employers are planning to give employees this year the largest merit increases since the start of the financial crisis, according to a new survey by Towers Watson.
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The survey found that companies are optimistic and are budgeting merit increases of 3% for 2011.  That compares with the 2.7% merit increase awarded to employees overall in 2010 and is the largest merit increase since before the financial crisis when increases typically averaged 3.5% – 4%. 

According to a press release, though the horizon is brighter for most companies, the survey also found that 5% of companies plan to freeze salaries for all workers this year, the same percentage as last year. However, 13% of companies plan to freeze salaries for executives while 12% plan to freeze salaries for hourly workers. Both figures are down sharply from 2010.  

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Companies provided the largest merit increases (4%) in 2010 to workers who far exceeded their performance expectations, while those who exceeded expectations received a 3.4% average increase. Conversely, workers who did not meet performance expectations did not receive any increase in 2010.

Hiring Freezes Thawing  

The new survey by Towers Watson also found that the hiring freezes that were put into place during the recession are beginning to thaw, especially for professional and technical workers, and positions that require employees with critical skills.  

Forty-two percent of companies are planning to hire workers for positions that require critical skills this year, while 40% plan to add professional and technical workers to their payrolls. One in four companies also plans to hire sales professionals and hourly workers in 2011.   

The survey also indicates that the attraction and retention challenges that employers are facing are confined to select employee groups - primarily critical-skill and top-performing employees. More than half (54%) of companies reported problems attracting critical-skill workers, while 37% are having difficulty hiring top-performing employees. About three in 10 companies report problems retaining critical-skill employees, while one in four have difficulty retaining top performers.   

The Towers Watson survey was conducted in late January and early February, and is based on responses from 381 large and mid-size U.S. employers representing a broad range of industries.

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