For those of you wondering, Yahoo Newsgroups are down for routine maintenance today. It isn't clear when they will be back up, but rather than waiting, I'm going to try and report the latest news from the Board meeting as well as elsewhere. First off, the good news: As noted in my previous, brief message, the PERB voted today to retain the 8% "assumed rate" so that the "guarantee" will not change anytime in the next two years. That ought to reassure anyone near retirement, but not quite ready for retirement that earnings on Tier 1 account balances will not go down. I wish I could just stop here. It would be time to celebrate.
Unfortunately, along with the good news comes some not-so-good news. My friends at the meeting today report that Mercer and the Board threw a real curveball at both members and employers today when they decided to change the methodology used to construct the mortality tables. To make a long story short (and hopefully simple), the Board adopted the Mercer recommendation to move from "static mortality" to "generational mortality". What this does is to create a separate table for each whole number age (e.g. 60, 62, 67), and is based on the assumption that "anticipates mortality improvements on a generational basis". In other words, the assumption is that each age cohort is expected to live slightly longer than the same age might have lived a few years ago. This is a very tricky assumption, but is used by actuaries around the country. You can read more about this type of construction here and here. Mercer predicts that this will lower Money Match benefits by about 2% (don't know whether this is across the board or tails off by age). This will also increase employer rates as full formula begins to overtake Money Match as the predominant mode of retirement.
In short, PERB seemed to be giving with one hand, and taking away with the other. I have no idea of how this will play out until I see the first set of mortality tables (due for presentation at the November meeting) constructed under this new assumption. It is doubtful that people waiting to retire after January 1, 2010 will benefit from these changes. At the same time, it isn't clear how much impact they will really have. The change in methodology obscures what used to be a fairly simple set of rules.
Finally, in a piece of offbeat news, a correspondent pointed me to a piece in this afternoon's OregonLive. Our favorite judge, Henry Kantor, is on Senator Ron Wyden's short list for two vacancies in the federal judiciary. Also on the short list is current Supreme Court Justice (and friend of PERS members/retirees) Durham. Several others were on the list. Five candidates will be interviewed next month with Senator Wyden passing on his recommendations to the President for his nominations. God help us all if Judge Kantor wins this appointment. He could singlehandedly slow down the Federal Judiciary to an utter crawl - a challenge that few before him have managed to do.
Unless there are updates or clarifications about the Board meeting, I don't anticipate any more posts until after August 1. I'm going out of the country and will have very limited access to email and to the intertubes. While I'm gone, everybody needs to behave.