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Thursday, November 21, 2013

25 To Life

Without much fanfare - actually without any fanfare - PERS quietly posted the new Actuarial Equivalency Factors on its website in (my opinion) a rather obscure location.  After studying the factors and matching them up with a few other sets I have stored away from past years, it does look like the option 1 (base) benefit has declined by somewhere in the vicinity of 2-3.5% depending on retiree age.  By itself, this corresponds to about the three month setback I’ve discussed as rumor in previous posts.  There are a few surprises in the tables, primarily in survivor benefits.  From reports I’ve gotten, both those posted publicly, and in instances where people have reported to me privately, it appears that members with younger spouses seem to get some of the reduction back as the joint survival tables show about a 1% improvement over prior tables.  I’m not sure I fully understand the reason for this, although I know that the PERS member cohort is living slightly longer than in the past, which accounts for the initial reduction (along with the cut in the assumed rate).  But, the add back for beneficiaries is a bit of a surprise, and I can’t totally explain why it should be the case.  Nevertheless, Option 1 is definitely a reduction, while Options 2 and 3 (and their corollaries 2a and 3a), appear to recover a very small about of the Option 1 setback from earlier sets of tables.  

So, I’m hearing stories about a net setback of 1.5% - 2.5% with a spousal or domestic partner beneficiary, slightly more of a setback for Option 1 (no survivor, no refund, maximum) benefit.

For those of you who want a copy of the new tables, they can be found here .  

I will probably have one more post before I leave the country and will be gone for much of December.  Where I’m going, they barely have telephones, much less internet, and cellular service (I was told I can rent a cell phone for $2500 - no thank you).  So you will see nothing from me between November 30 and December 18, while you may see one post before Christmas.  Do not panic.  That is dead time in the PERS world and so the fact that nothing gets posted in that period is not a sign that I’ve lost interest; I am merely seriously out of the country and unreachable.  I hope to have some cool photos when I return.

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