Mississippi Litigation Review & Commentary

Mississippi Litigation Review & Commentary

Comments on the Latest Developments in Mississippi Civil Litigation

Philip is a trial attorney based in Jackson, Mississippi with a diverse civil litigation practice.

Category Archives: PERS Crisis

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Taking a Look at PERS’ Investment Allocation

Posted in PERS Crisis
This post looks at PERS’ investment allocation. The chart below lists PERS’ target allocation for each asset class, return, and the allocations four years ago and today. Asset class Target allocation 1 year return 10 year return 12/31/14 allocation 12/31/18 allocation U.S. equities 27% -5.68% 13.2% 35.80% 25.51% Foreign equities 22% -7.38% 7.25% 21.51% 20.67%… Continue Reading

Bigger Pie Forum Examines PERS’ 13th Check

Posted in PERS Crisis
The week before Christmas Bigger Pie Forum looked at PERS’ cost of living adjustment (COLA), commonly known as the 13th check. PERS recipients get a 3% raise every year as a COLA. Many retirees take it in a lump sum at the end of the year–the 13th check. PERS’ COLA exceeds commonly recognized inflation indexes.… Continue Reading

California Litigating Whether PERS Promises Guaranteed

Posted in PERS Crisis
There is an interesting case before the California on the issue of whether that state’s pension benefits are guaranteed. The Sacramento Bee reports here. The State’s argument: “Neither the U.S. Constitution nor the California Constitution requires the state to mismanage its affairs and continue a broken system for decades, even after the state has concluded… Continue Reading

The REAL PERS Financial Report

Posted in PERS Crisis
I recently posted about the latest PERS annual report. Last week Kingfish weighed in on Jackson Jambalaya with a great summary and explanation. Here are some of his observations: The funding level has fluctuated between 60.4% and 61.8% over the last five years even though the PERS portfolio generated an average rate of return of… Continue Reading

Reading Between the Lines of the PERS Valuation Report

Posted in PERS Crisis
PERS recently had a board meeting where it released its 2018 Valuation Report. The report covers the period ending June 30, 2018. The cover letter notes that since the last valuation, the PERS board increased employer contribution rates from 15.75% to 17.40%. That translates to better funding levels for PERS and more potholes for roads.… Continue Reading

Why Investment Earnings Are So Important For PERS

Posted in PERS Crisis
Here is an excellent blog post about the percentage of public pension income from investment returns. The average for all public pension plans is about 60% of income is from investment returns. That’s why the investment assumption is so important. It needs to be realistic to get a true sense of how PERS will perform… Continue Reading

WSJ: Public Pension Funds Making Promises They Probably Can’t Keep

Posted in PERS Crisis
The Wall Street Journal reported last week on the latest investment returns for public pensions like Mississippi’s PERS. It has a good explanation of why governments aren’t doing anything about the growing PERS crisis: But government officials seeking to make their investment targets more conservative have a powerful disincentive: Assumptions of high returns appeal to… Continue Reading

PERS Doing Great!!!!!

Posted in PERS Crisis
Not really. Here is a Charlie Mitchell column in the Clarion-Ledger about PERS. It includes: While PERS is far more solvent than Social Security, Uncle Sam’s program for senior citizens, there are some question marks. Bad analogy. Uncle Sam can print money to pay Social Security benefits. Literally. Mississippi can’t print money. You can’t compare… Continue Reading

When Will PERS Armageddon Arrive?

Posted in PERS Crisis
Everyone knows PERS is going to implode one day. PERS executives, legislators, State executives, they all know. Here are just a few articles on the topic just last week: The Pension Time Bomb Collapse of Public Pension Funds is No Longer a Distant Prospect Public Sector Pensions are a Problem Pension Tsunami posts links to… Continue Reading

Looking at Mississippi PERS Downside Risk

Posted in PERS Crisis
In December I posted links to the PERS 2017 financial reports here. Today I look at downside risks. Here are the two pages I focus on, which are pages 58-59 of the Comprehensive Report: 2017 funding ratio pages. These pages show PERS has a funding ratio of 61.49%. That means Mississippi is scheduled to pay… Continue Reading

WSJ Explains the PERS Investment Assumption Fairy Tale

Posted in PERS Crisis
In Saturday’s WSJ, Jason Zweig discussed the unrealistic investment assumptions in the nation’s public pensions, which includes Mississippi’s PERS.  The opening: With U.S. stocks at all-time highs, it’s more important than ever that investors be brutally realistic about future returns. Some of the most purportedly sophisticated investors in the world, the managers of giant pension… Continue Reading

PERS Releases 2017 Financial Reports

Posted in PERS Crisis
Mississippi PERS has released its 2017 financial reports. There is a popular summary report (8 pages) and a comprehensive report (188 pages). Here are links to the reports: 2017 Popular Financial Report 2017 Comprehensive Report Despite robust stock market performance and 63% of the assets invested in equities, PERS’ funding level barely increased–from 60 to… Continue Reading

Some Politicians No Longer Ignoring PERS Crisis

Posted in PERS Crisis
As 2018 comes to a close, its getting harder for Mississippi politicians to ignore the PERS crisis. And some are not. The Sun Herald reported recently on Coast lawmakers Brice Wiggins and Michael Watson acknowleding the elephant in the room. From the article: Lawmakers who bring up the Public Employees Retirement System do so at… Continue Reading

PERS and the Next Financial Crisis

Posted in PERS Crisis
The Cayman Financial Review posted this article last month titled: “The state has been set for the next global financial crisis.“ The article discusses how the last financial crisis, PERS and the next financial crisis are related. As a result of the last crisis, central banks have kept interest rates near or below zero for… Continue Reading

PERS in a Death Spiral?

Posted in PERS Crisis
This John Mauldin article posted on Zero Hedge is scary for PERS participants and taxpayers. Although I recommend the entire piece, here are some key observations: Today we will zero in on one of those forces, which last week I called “the bubble in government promises,” which I think is arguably the biggest bubble in… Continue Reading

Time for State and PERS Board to Address PERS Crisis

Posted in PERS Crisis
Jeff Amy with the Associated Press had this article Sunday about an outside expert recommending PERS to change its fairy tail underlying assumptions. The recommended changes would affect the underlying investment return assumption that I’ve been harping on for years. Here is the article. From the article: The system assumes that inflation will run at… Continue Reading

Public Pensions in Crisis Even After Great Investment Year

Posted in PERS Crisis
The Wall Street Journal (paywall) reported last week that another year of great investment returns has not saved America’s public pensions. The article estimated that the total funding shortfall of public pensions is $4 trillion. The average investment return for public pensions for the fiscal year ending June 30 was 12.4%. That’s much better than… Continue Reading

Pennsylvania PERS Reform Shows Where This is Going

Posted in PERS Crisis
Last week the WSJ (paywall) reported on Pennsylvania’s PERS reform legislation. Not surprisingly, the reform moves toward 401(k) type retirement benefits as opposed to the soon-to-be-extinct pension system. From the article: The compromise measure will move most future state and public school workers at least partly into 401(k)-style plans to help shore up the deeply… Continue Reading

PERS Update Lagniappe

Posted in PERS Crisis
A few random bits of PERS related news. Just as a reminder, PERS is Mississippi’s Public Employees Retirement System. It’s a defined benefits pension plan. Unlike 401(k) plans and IRA’s that most private sector employees in my generation and younger are familiar with, pensions have a defined amount that has to be paid out upon… Continue Reading

More Bad News on PERS

Posted in PERS Crisis
There is more negative coverage this week on public employment retirement systems, such as the Mississippi Public Employees Retirement System: Hidden Debt, Hidden Deficits: 2017 Edition, by Joshua Rauh; and The Unavoidable Pension Crisis, by Lance Roberts of Real Investment Advice. Here are some excerpts from the Rauh report: “…the basic flaw in governmental pension… Continue Reading

PERS Crisis Unavoidable?

Posted in PERS Crisis
I recently read this Lance Roberts article about the unavoidable pension crisis posted on Zero Hedge. The article discusses the investment rate of return assumption that I have focused on in my posts on PERS: The biggest problem, following two major bear markets and sub-par annualized returns since the turn of the century, is the expected investment… Continue Reading