1.
MARYLAND PENSION SYSTEM SETTLES TECHNOLOGY SUIT...BY DROPPING IT:
According to PlanSponsor.com, the Maryland State Employee
Pension System has dropped its $22 Million lawsuit against a technology
vendor hired to upgrade the System’s old computers. The dismissal
may be a tacit admission that the Fund’s own errors in its electronic
procurement process made the lawsuit tenuous. It gets worse: under the
settlement, the Pension System will pay the vendor $3.5 Million, most of
which it withheld because of dissatisfaction with the work.
2. LOCAL
MASSACHUSETTS FUNDS MAY GET CONTRIBUTION RELIEF:
Talk about dangerous precedents: a Massachusetts proposal would allow
communities to suspend 2/3 of their unfunded liabilities in fiscal
2004 and 1/3 of their total pension payments in 2005. Retirees, understandably,
are up in arms, reports PlanSponsor.com. They oppose any refinancing
of unfunded liabilities, arguing that they must be paid off by 2030,
and that the state should not raid retirement assets to pay ordinary
operating expenses.
3. FRESNO
COUNTY, CALIFORNIA, SUES RETIREMENT BOARD OVER PENSION CALCULATIONS:
Alleging that the practice could cost it more than $30 Million, Fresno
County has sued its retirement board over the manner in which pensions
are calculated for County employees. Most government agencies throughout
California base retirement on a single year’s pay -- or 26 consecutive
pay periods. In Fresno, pensions are calculated based on the highest
26 pay periods during an entire career. Because the highest pay for
most retirees is received during the last year, the methodology does
not benefit the majority of retirees: only 250 out of 3,500 retirees
are affected. But, because in 1997 Fresno County and other counties
settled a lawsuit on retirement benefits that added vacation payouts
and other benefits into pension calculations, the more liberal calculation “spikes” a
few pensions as much as $1,000 per month. A Superior Court Judge will
set a hearing on the matter, but has denied a temporary injunction
to stop the practice pending the litigation.
4. MEMBER
OF FLORIDA MUNICIPAL FIREFIGHTER PENSION BOARD IS AN “OFFICER”:
Reiterating opinions that go back almost 20 years, the Florida Attorney
General has held that a member of a municipal firefighter pension board
created under provisions of Chapter 175, Florida Statutes, is an officer
for purposes of the dual office-holding prohibition in Article II,
Section 5(a), Florida Constitution. The issue arose in context of a
city considering appointment of a county commissioner as a member of
its firefighter pension board. We often wonder if people ask the same
question over and over again, hoping to get a different answer. AGO
2003-27 (June 25, 2003).
5. BUFFETT
ON DERIVATIVES:
The global credit derivatives market, which wasn’t even tracked
until 1997, has ballooned to $2 Trillion based on the so-called notional
value of the debts that underlie the contracts, according to Fitch
Ratings Service. That market, Fitch predicts, will grow to $4.8 Trillion
by next year. In his annual letter to shareholders in February, 2003,
Warren Buffett, Chairman of Berkshire Hathaway, said “the range
of derivatives contracts is limited only by the imagination of man,
or sometimes, so it seems, madmen.” Incidentally, during Berkshire
Hathaway’s recent annual meeting of shareholders, Buffett played
bridge with some of the attendees, terming the game “child’s
play” compared with the arcane game of credit derivatives.
6. DAVE
BARRY NAMES HIS CAR “THE ACTUARY”:
For all of our actuary friends, we felt the need to report on a recent
column from Dave Barry, Miami Herald humorist. Because his car has
a modern, quiet engine, he assumes it has an engine: “I’ve
never had a reason to look under the hood. For all I know, there’s
a small alien spacecraft in there, or Vice President Cheney.” He
reminisces about his 1971 Chevrolet Vega, “which was the result
of a bet among General Motors designers to see if they could make a
car entirely out of plastic and rust.” By today’s standards,
the Vega was not so much a motor vehicle as a paperweight with a horn. “And
yet I vividly remember that car, unlike the cars I’ve had in
recent decades, all of which have the personality of a pension actuary.
In fact, that might be the formal name of my current car: The Actuary.” In
the old days, they wrote great car songs, like Ronny and the Daytonas’ “Little
GTO” and the Beach Boys’ “409.” But “nobody
will ever write a song like that about my Actuary, or any other modern
car. Modern cars are just not songworthy.” So, Barry has resolved
to get a vintage Vega, and carry it in a Tupperware container in the
glove compartment. Then, “when I encounter other vintage-car
guys, I’ll lower my window, and shake my Vega at them. That way
they’ll know that, inside my Actuary, I am still cool.” Hey,
with all those lawyer jokes circulating, a fun-piece about actuaries
ain’t no big deal.
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