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City Employees Pension Fund Problems


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#1 RD Milhollin

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Posted 23 June 2016 - 09:39 AM

I was surprised to not find an existing thread on this forum regarding the Fort Worth city employee pension fund problems. Apparently that account is leaking money, primarily due to a heavy reliance on investment income to cover a portion of future obligations. Well, we all know how investment income looks these days, and perhaps well into the future... Mayor Price sees the situation as critical:

 

http://www.star-tele...le85144097.html

 

Moody's has downgraded Fort Worth municipal bonds, but that sort of action has lost many teeth, again due low interest rates and the resultant low cost of borrowing, but the city and the fund management has an obligation to citizens and more importantly to city retirees to manage the fund in a responsible manner so that it is solvent into the future. Were benefits promised under the pension program too generous? Should the employee contribution have been higher? Should the trustees have seen the writing on the wall and moved to change the makeup of the fund's investments many years ago? What is the cost of managing this fund as a percentage of its value? Many questions are being asked and there are several options possible to address the issue, but the city needs to correct the path the fund is taking while maintaining it's promise to employees covered by the fund and considering the costs to taxpayers.



#2 hannerhan

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Posted 24 June 2016 - 10:09 AM

EVERY pension fund in the world relies on investment income to fund future obligations.  I think the #1 question that should be asked is: how has the CIO and investment team been performing compared with peers?

 

I happen to have first-hand knowledge of this business (and make no mistake, investing is a business) and my impression is that the city has not taken it very seriously.  Which is a shame, because $2 billion is a lot of money, and with the right leadership it could compound nicely over decades.  It's astounding to me that the fund lost money over the past year due to "poor market conditions" and the proposed fix for this is getting MORE aggressive.  If you're losing money now, you don't solve that problem by getting "more aggressive," you solve it by holding people accountable.



#3 JBB

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Posted 09 December 2016 - 02:44 PM

I wonder how closely the city of Fort Worth is paying attention to the problems that the city to the east is having with their pension fund.  I'm afraid of an attitude of "that will never happen to us".



#4 renamerusk

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Posted 09 December 2016 - 03:29 PM

Me too. 

 

However, this problem seems to stem from how members who make up the Public Safety sectors access their pension.  It is problematic that active members are permitted to draw pension funds while remaining on duty; and that the interest accrued is guaranteed at an above market rate.

 

Rumor is that many members are now millionaires as a result of the way rules of pension fund are being applied.



#5 JBB

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Posted 13 December 2016 - 10:03 AM

I tried to post this over the weekend when I saw it and I don't know if it was the forum or my computer having issues, but it never went through:

 

http://www.star-tele...e119954513.html

 

Fort Worth still has the unfunded liability problem that has improved over the last few years and their DROP accounts have a 5 year time limit and lack the interest guarantees that are causing Dallas so many issues.  






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