Category: CalPERS

CalPERS Long-Term Care: What Happens Tomorrow?

Although CalPERS doesn’t run the UC retirement plan, at one point CalPERS offered long-term care insurance to UC employees.  It seemed to some folks to be a good idea at the time and they took out policies.  Long-term care policies can be bought from commercial carriers.  The problem is that you have to trust that these carriers will do right by you many years in the future when you may not be in the best condition to assert your rights.  It appeared, however, that having CalPERS – a public entity – providing the policies might be a solution.  Sadly, there were very big premium increases not long ago and cut back plans.  Lawsuits were filed and the matter is still pending.  An article in the Sacramento Bee says that CalPERS is again opening policies to new subscribers.  The article seems to indicate that you don’t have to be a CalPERS member to apply – which would seem to mean that UC employees are again eligible.  You can read the article at:
http://www.sacbee.com/2014/02/06/6134703/calpers-reopens-long-term-care.html

Yours truly has not yet verified that UC employees are in fact eligible for new policies.  But even if they are, the past history suggests extreme caution before subscribing.

CalPERS may be happy to take your money today.  But will it love you tomorrow?
[youtube http://www.youtube.com/watch?v=cnPlJxet_ac?feature=player_detailpage]

The Rewards of Good Behavior (and the penalties for the reverse)

With a possible pension initiative coming to the ballot, it would be nice if public pension plans stayed on Good Behavior.  Alas:

Federal investigators are looking into allegations that CalPERS violated insider trading laws this year when it purchased $26.6 million in restricted stock and then decided it didn’t need to reverse the trades when they were discovered. Two sources with knowledge of the Securities and Exchange Commission’s inquiry say on condition of anonymity that it involves stock purchases that the nation’s largest public pension fund made in March, including nearly $24 million in global financial firm JPMorgan Chase & Co. and almost $2.7 million in Access Midstream Partners LP, an Oklahoma-based energy company. 

According to an internal memo and a fired employee’s challenge of her termination by CalPERS, some staff at the fund contend that the purchases – and a subsequent decision not to rescind them – calls their managers’ qualifications and judgment into question. 

“We wanted to reverse (the trades),” said Ted Nishio, a retiree who worked in CalPERS’ Division of Enterprise Compliance who said he was fired after he told his boss that the fund should quickly act. “But the higher ups said, ‘Let it be.’ “…

Full story from the Sacramento Bee at http://www.sacbee.com/2013/12/28/6031076/security-and-exchange-commission.html

Were those higher ups, by any chance, named John, Paul, George, and Ringo?
[youtube http://www.youtube.com/watch?v=Y4zaofnVhps?feature=player_detailpage]

Read more here: http://www.sacbee.com/2013/12/28/6031076/security-and-exchange-commission.html#storylink=cpy

Core Competencies for Regents?

Yours truly noted with interest this item from the State Worker blog of the Sacramento Bee:

CalPERS’ governing board aims to up its collective understanding of everything from financial statements to financial markets with a new set of “core competencies” that will help shape education and training. The policy, which the board is imposing on itself, also requires board members to have familiarity with topics ranging from health care and pension plans to board governance and communication… 

Full story at http://www.sacbee.com/2013/12/05/5974549/calpers-sets-knowledge-standards.html

Now if the Regents were to adopt such a policy, what would their core competencies be?  Pension funding?  Capital projects evaluation skills?  Business plans?  Just a thought!

But maybe they know all that:

Read more here: http://www.sacbee.com/2013/12/05/5974549/calpers-sets-knowledge-standards.html#storylink=cpy

Let’s Start With This Idea on the Pension Initiative: One Size Doesn’t Fit All

Don’t buy it.

Editorial: The pension (and retiree health) initiative on which we have been reporting on this blog sweeps in UC for no particular reason.  Yet all the propaganda concerning it so far deals with mayors and cities.  UC has no mayor and isn’t a city.

Were the Regents consulted by initiative proponents?  Was anyone at UCOP consulted?  Anyone at UC at all?  Yours truly sincerely doubts it.  Did anyone in the group pushing the initiative look at such issues as faculty recruitment, compensation, or any other UC issue?  Did they look at the issue of the constitutional autonomy of the Regents?

Basically, UC needs out.  The proponents of the initiative have plenty of time either to file a revised initiative excluding UC or making an amendment to what they have filed so far. 

The Regents, as blog readers will know, amended the UC pension plan in 2010, well before the state enacted its own plan (which exempted UC because of its earlier action).  We don’t want to be swept into someone else’s plan.  Where the governor stands on all of this is unclear.  The Sacramento Bee is reporting that he put a proponent of changes similar to the ones in the initiative on to a state board.  See http://www.sacbee.com/2013/10/17/5830657/jerry-brown-taps-pension-reform.html.  CalPERS opposes the initiative.  See http://www.sacbee.com/2013/10/16/v-print/5827735/calpers-weighs-in-on-new-public.html and http://www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2013/oct/pension-ballot-initiative.xml.  However, the legal fight that CalPERS is having with the bankrupt City of San Bernardino is tending to inflame the pension issue in the public mind.  See http://www.sacbee.com/2013/10/18/5831919/calpers-renews-san-bernardino.html. The renewed BART strike in the Bay Area also is not going to help with public opinion.  So, again, UC needs out.  And if it can’t get out, UC needs a plan pronto.

The CalPERS Long-Term Care Affair

We have noted in earlier posts that although UC employees are not covered by CalPERS, at one point in the past, they were offered the “opportunity” to buy long-term care insurance through CalPERS.  But then CalPERS began jacking up the cost and, for those who protested, offering inferior alternative policies.

CalPERS position is that it didn’t deliberately lowball the initial premiums but instead just underestimated what the costs would be.  But some subscribers disagree and now there is a lawsuit.

From the Sacramento Bee:

CalPERS was sued Tuesday over the big rate hikes it imposed on its long-term care insurance program, which covers stays in nursing homes. The class-action suit was filed by a Los Angeles law firm on behalf of more than 100,000 CalPERS members who have purchased the coverage and now face big rate increases. The lawsuit, filed in Los Angeles Superior Court, says policyholders were duped into thinking the rates would be fixed and “reasonably priced.”…

Full story at http://www.sacbee.com/2013/08/06/5628197/calpers-sued-over-long-term-care.html 

Update: A link to the lawsuit is at http://blogs.sacbee.com/the_state_worker/2013/08/read-the-lawsuit-against-calpers-on-long-term-care-insurance.html

Does everything have to be seen?

From time to time on this blog, we have pointed to the issue of privacy and potential ID theft posed by the practice of certain newspapers posting public employee and pensions by name.  While courts have seemed to see the handing over of raw payroll data as a required public disclosure, we have noted that whatever purposes such posting has – ostensibly “good government” – could be accomplished using job titles without names, statistical distributions, etc.

It may seem at this point that nothing more could be said or done about the impact on UC.  Note that private universities face no such requirement despite their large-scale receipt of public monies in the form of research grants, government scholarship and loan programs, tax-favored treatment, etc.

Yours truly writes a weekly “column” for another website, the Employment Policy Research Network (EPRN).  You might be interested in today’s column on this subject which results indirectly from a brouhaha about posting CalPERS pensions.  It can be found at:

http://www.employmentpolicy.org/topic/402/blog/mitchell%E2%80%99s-musings-7-29-13-need-privacy-transparent [Click on the pdf link.]

or

Hearing CalPERS Rate Hike for Long-Term Care Insurance

San Francisco’s Poor House

As prior blog posts have noted, although UC is not under CalPERS, UC employees – because they were state employees – were invited to enroll in CalPERS’ long-term care insurance plan.  Such plans ostensibly protect enrollees against potential catastrophic expenses that can be entailed in major health crises.  Those who did enroll now find themselves facing large rate hikes or accepting an alternative less generous plan.  Many who enrolled did so assuming that CalPERS would protect them from such hikes.  Yours truly has encountered a number of folks who now find themselves in this predicament.  CalPERS blames the matter on stock market reverses, low current interest rates, and early underestimates of what the program would actually cost.

Yours truly offers this observation.  An insurance carrier can cut the cost of offering such plans by removing from coverage the truly catastrophic expenses.  But that is what insurance is all about.  If you go to the audio link below, you will hear from CalPERS that most people don’t have catastrophes and therefore taking an alternative plan that effectively removes them from full coverage won’t affect most enrollees. The problem is that it is catastrophes that insurance is all about.  Most people who have fire insurance on their houses won’t have their house burn down.  But it is precisely that unlikely event that causes people to buy fire insurance. If CalPERS ever does reopen with some version of long-term care insurance – see below – caveat emptor.

The California State Assembly Committee on Aging and Long-Term Care held a hearing today largely devoted to the CalPERS issue.  A link to an audio of the first part of that hearing – which runs about two and a quarter hours – can be found below.  There is a general presentation on long-term care followed by witnesses including one from CalPERS.  After the official witnesses, there are lengthy public comments by CalPERS enrollees and others, generally expressing anger at the hikes, the fact that CalPERS is an autonomous public entity not subject to the kind of regulation that applies to private companies, etc.  At present, it appears that CalPERS is not offering long-term care policies to new enrollees.  However, it was said that there might be such new enrollment allowed – albeit to a limited policy – later this year.

The audio link is at:

Below is the agenda:

“Paying the Price for a Long Life: What’s Next for Long-Term Care Insurance?”
 
Hearing of California Assembly Committee on Aging and Long-Term Care held largely in response to large premium increases announced by CalPERS for its long-term care program, May 7, 2013
 
Hearing chaired by Assembly Member Mariko Yamada
 
Presentation on trends of older Americans and Older Californians preparing for retirement and Long-Term Care, Victoria R. Ballesteros, Director of Communications, The SCAN Foundation
 
PANEL 1 Government/Industry Officials

1. Ann Boynton, Deputy Executive Officer of CalPERS
2. Nettie Hoge, Chief Deputy Commissioner, Department of Insurance
3. Ted Angelo, Association of California Life & Health Insurance Companies
4. Rebecca Blanton, Executive Director, Commission on the Status of Women and Girls
Public Comments
 
Note: Recorded from a live stream. In some cases, there were breaks in the transmission. Gaps have been edited out of the recording.

Hiking

Earlier blog posts have noted that CalPERS‘ premiums for long-term care are going nowhere but up.  Another rate hike is being announced with an option instead to move to a lesser-value plan.

UC employees and faculty are normally not covered by CalPERS’ pension and health care plans.  However, as state workers, they were offered the chance to enroll in CalPERS’ long-term care program when CalPERS got into that business.  Unfortunately, there was no guarantee concerning what the premiums would be over time.  From the Sacramento Bee‘s State Worker blog:

The California Public Employees’ Retirement System today is mailing some 150,000 official notices to long-term care insurance policyholders that a rate hike is coming. The letter explains that CalPERS is raising premiums 5 percent this year on the plan’s costliest policies, which offer lifetime coverage and daily benefit payouts that keep up with inflation.Policyholders can avoid the premium increases by moving into plans that offer up to 10 years of benefits without automatically inflation-adjusted coverage. The deadline to opt into another plan varies by policyholder. CalPERS’ letter also flags a 5 percent increase planned for 2014 and another 85 percent jump in 2015 spread over two years. All the rate hikes apply to policies offering inflation-protected, lifetime coverage for things like nursing home services and in-home care…

Full story at http://blogs.sacbee.com/the_state_worker/2013/04/calpers-letters-detail-long-term-care-rate-hikes-options.html

Read more here: http://blogs.sacbee.com/the_state_worker/2013/04/calpers-letters-detail-long-term-care-rate-hikes-options.html#storylink=cpy


Seems like they are asking too much for too little and doing it too late:
[youtube http://www.youtube.com/watch?v=IM39yIKoSo4?feature=player_detailpage]
Update: Legislative hearings on CalPERS long-term care are now scheduled:
http://www.sacbee.com/2013/05/02/5388222/the-state-worker-committee-calls.html

Indirect Flattery for UCRP from CalPERS

According to a Bloomberg report, CalPERS’ chief actuary is recommending that his fund follow the practice that is currently in place (assuming the Regents continue it) for the UC pension fund.  At present, CalPERS follows a fifteen year smoothing period, extremely long, and doesn’t get to 100% funding in thirty years.  UC has five years smoothing and a plan for 100% over 30 years.

…Alan Milligan, (CalPERS’)… chief actuary, recommends that the biggest U.S. pension stop spreading out losses and gains over 15 years and instead set rates based on how much is needed to reach 100 percent funding within 30 years… Under Milligan’s proposal, the fund would shrink its 15-year rolling period for asset smoothing to five years and amortize gains and losses over a fixed 30-year period rather than the current rolling 30-year period. A fixed period means that all obligations will be fully funded by a specific date…

Full article at http://www.bloomberg.com/news/2013-04-16/california-pension-may-ask-for-50-boost-to-close-gap.html

UPDATE: Report indicates that the recommendations are likely to be adopted:
http://blogs.sacbee.com/the_state_worker/2013/04/calpers-board-votes-for-accounting-changes-to-hike-pension-costs.htm
A more detailed account is at http://calpensions.com/2013/04/17/calpers-panel-approves-rate-hike-on-split-vote/

Long-Term Care Cop Out?

Back on Feb. 20, we posted a piece on a big CalPERS hike for long-term care insurance.  We noted that although UC is not covered by CalPERS, as state employees, UC employees could buy – some might say were encouraged to buy – long-term care insurance through CalPERS.  Now premiums are climbing rapidly and some may drop the insurance (losing what they paid) due to the price hikes.

From the Sacramento Bee State Worker Blog:

Longtime policyholders say that when CalPERS was pushing the insurance in the 1990s, it guaranteed their rates wouldn’t rise. That gave younger adults – a crucial group for such plans – incentive to buy. Surely CalPERS knows what it’s doing, those early purchasers thought. A graph in a sales brochure from 1998 shows inflation-protected coverage for a 45-year-old as a flat blue line. It starts at $75 per month and stays there. “With this option, your plan is designed to remain level and won’t increase each year,” the brochure says…  Asked whether CalPERS broke its promise, Ann Boynton, deputy executive officer of the CalPERS Benefit Programs Policy and Planning unit, said, “This could sound like a cop-out, but I wasn’t here. I can’t say what anyone was told or what they heard.” Again, from the brochure: “The … program is one of the most comprehensive and affordable plans available today.” But the material also left wiggle room for raising policyholder payments: “Your premiums can only be changed through action of the CalPERS Board.” …
Our earlier post can be found at:
Seems like some cops are nicer than others: