Letter to the Editor of The Wall Street Journal from Edward H. Friend

BOCA RATON, Fla., Sept. 9, 2014 /PRNewswire/ -- The Editor:

To avoid unusual [excess of $200,000] public sector pension awards as identified in the letter from Mark Bucher, President of the California Policy Center, appearing in the September 5 Wall Street Journal, employers and public sector unions should negotiate a fixed percentage of payroll as the financing source for pensions to be awarded in each jurisdiction.  Employers would then be willing to share responsibility for the design of an appropriate pension structure with union leaders, building a cushion to absorb the impact of market volatility, protecting pensioners from unacceptable annual changes and controlling specialty benefit provisions such as "spiking" and "DROP."  These leaders would be concerned about pension adequacy for the greater membership and want to avoid the squandering of assets on unnecessary supplementation.

This arrangement, called "Double DB," enables pooled professional investing rather than requiring employees to invest funds in their own individual accounts and facilitates pension annuities rather than the awarding of lump sums at time of retirement.  

The State Association of California Retirement Systems (SACRS) has scheduled the printing of an article on this subject in an upcoming issue of the SACRS Magazine.  Fox TV covered it in an interview addressing America's pension crisis. 

Edward H. Friend (FSA, FCA, MAAA, EA, AIA)
President
Ed Friend, Inc.
[email protected]
875 E Camino Real, Ste 10E
Boca Raton, FL 33432
(561) 409-2270 (T)
(561) 395-4796 (F)
(202) 744-9441 (C)

Mr. Friend has served as lead actuary to hundreds of public agencies and public retirement systems of all sizes, including CalPERS, the largest public retirement system in the United States. He has served as: President, Conference of Actuaries in Public Practice; Vice-President, American Academy of Actuaries; Member, Board of Governors of the Society of Actuaries; and contributing author/founding member, International Association of Consulting Actuaries.

SOURCE Ed Friend, Inc.