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Rep. Peter Hoekstra, R-Michigan, has introduced the
Retirement Account Freedom Act of 2009. It would amend the Internal Revenue Code
of 1986 to waive the 10% penalty on distributions from certain retirement plans
during periods of high unemployment.
In a recent study entitled “Variable Payout Annuities and
Dynamic Portfolio Choice in Retirement,” published in the Journal of Pension
Economics and Finance, Olivia Mitchell of the Wharton School at the
University of Pennsylvania argues in favor of laddered annuities. Mitchell shows
that by laddering the purchase of fixed immediate annuities or buying annuities
gradually over time, while keeping the rest of a portfolio invested in a mix of
equities and bonds, people can substantially increase the likelihood of meeting
their retirement income goals. In so doing, one can lock in low interest
rates-and payouts by buying annuities at different times and with different
interest rates.
The House of Representatives unanimously passed a
resolution marking National Save for Retirement Week. This year, the week will
be observed from October 18 to 24, 2009.
ERISA and the Consumer Financial Protection Agency
The ERISA Industry Committee (ERIC) has sent a letter to
House Financial Services Committee Chairman Barney Frank (D-MA) expressing
"strong support" for the Chairman's recent statement that a proposed Consumer
Financial Protection Agency (CFPA) would have no regulatory authority over
retirement plans.
Chairman Frank on July 8 introduced legislation to create
the CFPA to oversee consumer financial products and services. Chairman Frank
later commented that the proposed new agency would have no authority in
regulating retirement plans.
ERIC's letter
points out that all retirement plans are already heavily regulated by the
Departments of Labor and Treasury, Internal Revenue Service and Pension Benefit
Guaranty Corporation, and are subject to strict fiduciary standards under the
Employee Retirement Income Security Act (ERISA), which Federal courts, including
the U.S. Supreme Court, have recognized as being among the highest standards
known to law.
Indian Prime Minister Manmohan Singh is keen on extending
the retirement age of India’s civil servants to sixty-two, up from age sixty.
The proposal has two justifications. The first is fiscal in that the two-year
extension would curb expenditures on pensions. The other reason the PM wants to
push retirement back another two years is that he wants to make tap the valuable
human resource that bureaucrats represent.
A Benefits Investigation in
Arkansas
The Attorney General of Arkansas has urged the Arkansas
Public Employees Retirement System to investigate benefits received by officials
in three counties: Jefferson, Garland, and Desha. At least six elected officials
in those counties started drawing retirement after temporarily taking themselves
off the government payroll, instead of vacating their offices. The six then
returned to the payroll, receiving retirement and salary.
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Texas Agriculture Commissioner Todd Staples has declared
Polk County a GO TEXAN Certified Retirement Community (CRC). The CRC program
helps communities attract retirees and potential retirees to make their homes in
Texas. Polk County joins 27 other cities and counties across the state as a CRC
member. County-seat Livingston is the largest city within Polk County.
Canada’s provincial and territorial premiers have called on
the Canadian federal government to host a National Summit on Retirement Income
to address critical long-term pension and retirement savings issues.
Bad Real Estate Decisions in Kentucky
Auditors have released a report sharply criticizing the
Kentucky Retirement Systems for a bad real-estate deal. The report from the
Finance and Administration Cabinet's Office of Policy and Audit concludes the
state pension system improperly used $700,000 in medical insurance funds in what
auditors termed an "ill-advised" purchase of 1.9 acres next to its offices in
Frankfort. The retirement system paid $752,000 for the property three months
after the previous owner bought it for $450,000 and then sold it to the Kentucky
State Police for $325,000.
Auditors said the purchase involved improper mingling of
funds, a lack of investment research and conflicts of interest.
Construction on a new headquarters for the city of
Detroit’s retirement system could begin this fall although residents in nearby
neighborhoods say the project is not the best use of the chosen site.
The division’s roughly 55 employees currently are housed on
the ninth floor of the Coleman A. Young Municipal Center. In January 2008, the
PFRS/GRS Jefferson Avenue Corp. — a joint venture of the General Retirement
System and the Police and Fire Retirement System — acquired 4.81 acres on the
Detroit River at 7850 E. Jefferson Blvd. for $1.8 million, according to city tax
records, with a state equalized value of $338,542. Plans call for a
30,000-square-foot, three-story office building, said Walter Stampor, executive
secretary of the city’s General Retirement System, at an estimated cost of $7.2
million. Stampor contends the department has grown as the complexity of pension
benefits has deepened and as the ranks of city retirees have swelled.
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