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Senator Jansen's staff testifies - "MPSERS on Edge of Disaster"

Nov 25, 2014

Posted with permission from the AFT Retiree Network

On November 13, the Senate Appropriations Subcommittee on General Government brought in officials from the Office of Retirement Services to answer questions about a recent MPSERS audit. Phil Stoddard testified that the audit had found no material weaknesses in the MPSERS system. However, staff persons from Senator Jansen's office highlighted four reportable conditions contained in the audit and used that as a basis to attack the health of the entire MPSERS system.

Mr. Stoddard reported to the committee that investment returns for MPSERS have been in the 94th percentile nationally over the past four years. He said that unfunded liabilities have been shrinking overall, and the relatively new hybrid plan is 105% funded. Mr. Stoddard stated that ORS runs one of the most sophisticated retirement systems in the country.

After Mr. Stoddard concluded his testimony, Deborah Drick and Mike Maloney from Senator Jansen's staff testified before the committee. They claimed that the MPSERS system is in fact teetering on the edge of disaster. They stated that the assumed rate of return in wildly overblown, and that the plans are woefully underfunded. Their opinion of the performance audit differed substantially from that of ORS, and they claimed that the audit paints a picture of denial and political expedience.

Mr. Maloney testified to the committee that the actuarial assumptions in the MPSERS plan are completely wrong. He stated that the mortality rate is wrong, the assumed rate of return is too high, and that the system is on the brink of collapse.

Committee Chair John Pappageorge (R-Troy) suggested that persons with such wildly different opinions as to the accuracy of the rate of return assumptions should try to come to some agreement on an accurate number. This issue will continue to receive legislative attention as the Senate examines Senator Jansen's proposed legislative package in December