- In 2010, French workers carried out a general strike and protests in the millions across the country to stop changes to their pension systems, which allowed workers to retire at 60. The government wanted to change the age to 62. The workers were victorious. Photo shows protest in Lyon.
(VOD: The Detroit City Council, under orders from its bosses anointed by the consent agreement, approved a contract with Milliman, Inc. to review the city’s pension fund systems, with the eventual objective of a takeover. Recent federal indictments of pension fund attorneys are linked to this objective. Detroit EM Kevyn Orr will have the power to appoint new officials to achieve the pension takeover.)
More on this is coming, but meanwhile, following is a statement from the Detroit pension systems’ actuary. For comments from pension officials which state the funds are on solid grounds, including 102 percent funding of Detroit Police and Fire, and 83 percent funding of the General system, click on http://www.detroitnews.com/article/20130321/METRO/303210470. A GRS report on the pensions’ status as of June 30, 2012 is due for release soon.)
GRS Views on Recent City of Detroit Studies
February 27, 2013 www.gabrielroeder.com
In Detroit in 2010, city workers including police and fire held large protest against Bing’s attempt to take over their pensions systems.
Gabriel, Roeder, Smith & Company (GRS) is the retained actuary for both the General Retirement System of the City of Detroit and the Police and Fire Retirement System of the City of Detroit. GRS is a Michigan based company with a national practice, and is a leader in Public Sector Retirement Consulting. Milliman, Inc., a Seattle based consulting firm, was called in recently to perform certain actuarial analyses of the City of Detroit’s Retirement Systems for the review team under the financial stability agreement.
GRS performs an actuarial valuation of both Systems each year. The actuarial valuations develop the liabilities and funded ratios of the plans as of the valuation date. They also develop the City’s contribution rates for the fiscal year that starts one year after the valuation date, based on established funding policies. In addition, our reports typically present information that allows the reader to understand the extent to which contribution rates may be expected to increase (or decrease) in the future and may provide recommendations on the operation of the System.
City workers protest pension cuts July 26, 2012.
An article in the February 26, 2013 Detroit Free Press “Police, fire pension costs could crush Detroit’s finances, study shows” asserts that Milliman has “audited” our 2010 valuation reports and found that “the GRS numbers … don’t hold water.” We do not have access to the alleged audit by Milliman and thus can neither confirm nor deny that the Milliman report contains that statement. However, we can confirm the following:
• The GRS numbers do hold water.
• GRS has not provided any information to Milliman in conjunction with an audit of the 2010 valuations.
• A traditional audit of an actuary’s work almost always involves an exchange of information between the retained actuary and the auditing actuary.
• Conditions are changing rapidly at the City. Any review or audit of work done in the past must take into account differences between current conditions and conditions in effect when the original work was performed.
AFSCME protest at CAYMC.
The article goes on to state that contributions to the two Retirement Systems could rise to very high levels over the next several years, when expressed as a percentage of payroll. That is no surprise, given the shrinking covered payroll and the relatively large number of retirees. Contrary to the implications in the article, there is no inconsistency between the 2010 funded ratios calculated by GRS and potentially high future contribution requirements estimated by Milliman.
Gabriel Roeder Smith & Company stands by its work for the City of Detroit Retirement Systems. Our reports are accurate, complete, and provide policy makers with the tools they need to make informed decisions.
We are continuing to work with both Retirement Systems to provide meaningful long term solutions that all stakeholders can embrace.
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