September 17,2012
Instead of watching America’s interest burn overseas on the TV, I decided to read some of the latest pension reports from the MLGW, The City of Memphis and Shelby County. Here is what the MLGW pension report dated January 1, 2012 said.
MLGW- Significant Issues in Valuation Year (Segal-Actuarial Valuation and Review as of January 1, 2012)
- Total plan contributions for 2012 are $42,390,087 (27.52% of payroll), compared to $38,489,027 (25.07% of payroll) for 2011. Employees are expected to contribute 8.00% of payroll, or $12,322,903. The Division’s annual required contribution is the remaining 19.52%, or $30,067,184. The Division’s contribution requirement increased by $3,858,883 for 2011 to 2012. This increase is primarily due to asset losses on an actuarial value basis caused by the continued smoothing of the large 2008 investment loss. Next year, those losses will be fully recognized.
- The plan had an investment loss on an actuarial basis of $71,228,820 for the year ended December 31, 2011. The actuarial rate of return was `1.29%, compared to the assumption of 7.50%. Total market value return was 4.57%. Currently the actuarial value of assets is $1,137,614,644, equivalent to 103.9% of market value.
Now look at some facts from the City of Memphis and Shelby County pension reports.
- The City of Memphis contributed 6.5% of payroll in 2011 and Shelby County contributed 7% of payroll in 2011. Why is the MLGW contribution so much greater.
Since January 1, 2012 the MLGW pension fund has done well but the year is not over yet. With the federal government continuing to print money, we all have to wonder how long we can continue to fund these pension promises. You cannot spend your way to prosperity as some politicians believe.