TEXPERS Legislative Update

5 THINGS YOU NEED TO KNOW ABOUT PENSION LEGISLATION

The State Affairs committee of the Texas Senate held a public hearing Monday, March 20, and discussed five pension bills. Here's a recap: 1. POLITICS VS. VOTER APPROVAL Senate Bill 151 authored by Sen. Paul Bettencourt, R-Dist. 7, is seeking to require funds to obtain voter approval before issuing pension obligation bonds. Some fear the bill would politicize pensions.  A representative with the Houston Police Officers Union testified before the committee and said if the pension obligation bonds were to be presented to voters and fail to gain support, it would be because of politics. The committee's chair, Joan Huffman, R-District 17, however, said she believes voters would support bonds if a case were made. TEXPERS confirmed its opposition to the bill.  The bill was voted out of committee and moves to the full Senate.

Will Americans see cuts to pension benefits?

Americans made it clear during the recent national election that they wanted to see a change in Washington, D.C. With a possible cut in pension benefits, many people feel they may not see that change. 

Read more.

TEXPERS renews accreditation for mandated trustee training program

The Texas Association of Public Employee Retirement Systems recently renewed as a Texas Pension Review Board’s Minimum Education and Training Program accredited sponsor of core content training  and continuing education for trustees and administrators.

The Pension Review Board is an independent state agency that oversees and reviews state and local government retirement systems and accredits training programs for trustees and administrators of public retirement systems. The PRB announced TEXPERS as a renewed accredited sponsor of core and continuing education activities Feb. 27.

The PRB mandates that a new trustee or administrator of a public pension system must take seven hours of training during their first year of service. Topic areas include fiduciary matters, governance, ethics, investments, actuarial matters, benefits administration, and risk management.

During a trustee or administrator’s subsequent years of service, they are required to take an additional four hours of continuing education every two years. Education includes these core content areas or non-core areas: compliance, legal and regulatory matters, pension accounting, custodial issues, plan administration, Texas Open Meetings Act, and Texas Public Information Act. 

TEXPERS developed its Basic Trustee Training class to fulfill the requirements of the PRB’s Minimum Education and Training Program, or MET. It is offered at least twice a year before TEXPERS’ conferences.

In addition to the basic training, the association periodically offers advanced trustee training to help them meet the PRB’s continuing education requirements. Click here to learn more.

Some say public officials serving time shouldn’t receive pensions

Texas government officials convicted on corruption charges are still eligible to collect public pensions, but not everyone thinks they should be able to benefit from their retirement. Sen. Van Taylor, R-Plano, authored Senate Bill 14 that includes a provision that would prohibit convicted criminal lawmakers from receiving their pension benefits.

Jackie Wang of The Texas Tribune found several “former elected officials with prior felony convictions who are potentially collecting retirement payouts.” In an email exchange with The Texas Tribune, Taylor said the idea that criminal politicians continue to receive government pensions while serving time is “appalling.”  

Some people are questioning if the bill itself is ethical, however. Is it fair to limit a person’s retirement benefits if the crime was not related to the government official’s duties? Although a person cannot collect Social Security while in prison, other retirement benefits of private citizens are not revoked if they are convicted of a crime.

And consider this: A veteran receiving retired military pay while in prison also is able to collect federal pensions, but with some exceptions, according to Miltary.com.  Veterans who are convicted of disloyalty to the United States such as espionage, treason, and sabotage can lose their benefits. In other words, the charges must be related to their service to be revoked.

Some say the same should be for government officials – only revoke benefits if criminal convictions are related to the public official’s office. What do you think?

Publication names TEXPERS associate member ‘Plaintiff Firm of the Year’

Law firm Bernstein Litowitz Berger and Grossmann, a TEXPERS associate member, recently was named “Plaintiff Firm of the Year” by Benchmark Litigation, publisher of financial news magazines.

The publication awarded BLB&G with the title during its 2017 Benchmark Litigation awards dinner Feb. 16. The ceremony recognizes the work of attorneys, law firms, and in-house counsels during the last year.

Tony Gelderman

"This prestigious award is very gratifying to our firm,” said Tony Gelderman, counsel of BLB&G. “We are truly dedicated to providing the very best service and representation to our public fund clients, many of which are Texas funds."

BLB&G is the only plaintiff firm in the United States ranked Tier 1 by Benchmark for securities litigation. Max W. Berger is the managing partner of the firm, which advises public pension funds and institutional investors on securities litigation, corporate governance and shareholder rights issues. The firm has 21 partners, nine counsels and 24 lawyers with offices in New York, San Diego, Chicago and New Orleans.

Click here to read Benchmark’s full analysis of the firm.

BLB&G is the first securities litigation firm allowed to join TEXPERS. The firm has been a member of the association since 2004.

Pension Fitness

Accounting rules may be the thorn in the foot of pension systems

State and local pension plans often are in better shape than their accounting reports indicate, according to a new research report out of the University of California Berkeley’s Haas Institute for Fair and Inclusive Society.

The new report argues that a perceived crisis in public pensions is mainly due to misguided accounting practices mandated by the Government Accounting Standards Board, a private group that sets standards for pension accounting.

According to the report’s author, Tom Sgouros, the accounting rules were designed for the private sector and do not hold up to public sector needs. The report centers on pension obligations and the ratio between the assets and the future liabilities, or funding ratio.

Essentially, Sgouros says the rules are meant to insure against risks that public pensions systems do not face and fail to protect against the risks public pension systems do come up against.  That’s because governments do not operate in competitive investment markets and there is not much of a threat of liquidation. The rules, Sgouros wrote in the report’s abstract, “also encourage ‘reforms’ that frequently do not improve the financial situation of a given pension system.”

He suggests a new accounting system be adopted that would offer a better picture of a system’s financial health and reduce the waste of overfunding.

The Week’s Ryan Cooper reported that public pensions are in better shape than people think, and cited the Haas Institute’s report. You can read Cooper’s story here and access the full Haas Institute report by clicking here.