Bob Mercer hates it when Rep. Stace Nelson uses his work to make political arguments. But Bob's asking for it. Check out this land mine Mercer slipped into the middle of his article today on swimmingly safe solvency of the South Dakota Retirement System:
This year marks the tenth anniversary of the shake-up that then-Gov. Mike Rounds ordered in SDRS management shortly after he took office.
The past decade didn’t turn out so well, however. Many trustees and administrators didn’t initially grasp the costs of the Rounds-era trend of retire-rehire, where employees resigned their government jobs, began collecting their SDRS checks and then returned to work, often in the same job, while the retirement checks kept coming.
There also was a benefit increase that had to be rolled back a year later, after the markets tanked.
Daugaard’s remarks praising the conservative corrections by the trustees encouraged state investment officer Matt Clark [Bob Mercer, "Daugaard Likes Safer Direction Taken at SDRS," Black Hills Pioneer, 2013.09.07].
Hmmm... let me read that passage the way I'd read it if I were running for Senate against the Nine Million Dollar Man:
- As Governor, Marion Michael Rounds shook up our state pension system's management.
- The state pension system ran into all sorts of trouble in the following years.
- The system required "conservative corrections."
- Conclusion: Mike Rounds messed up the state's retirement system!
I'm not saying I agree with that syllogism. Expect Governor Daugaard, if pressed, to revise his remarks to avoid any appearance of impugning his predecessor's pension performance. But expect Stace Nelson to cite Mercer's article to add to his case against Mike Rounds's policy failures and faux conservatism.
Sorry, Cory, there's nothing there. Wisconsin has an automatic benefit reduction required by state law that kicks when certain conditions happen (eg.,markets tanking causing funds to decrease beyond a certain point). I'm not sure what legal requirements pertain in SD, but what it tells me is that the trustees reacted appropriately to changes in the fund and the market. That benefits had to be rolled back after being increased is not that surprising in the environment that pertained.
Now the retire-rehire thing is a problem in my view, but not because it depletes the fund. I understand why it happens, especially in Pierre, but its strikes many folks who don't have pensions as too sweet a deal for state employees who have pensions. State employees should just take their pensions and go somewhere else for part-time work.
Don is exactly correct. The impact of the retire-rehire is miniscule with regard to the solvency of the fund. The big issue is the drop in market value of the assets and subsequent return projections which is independent of the retirement obligations.
Troy: how could a protracted debate on the debt ceiling affect that fund?
IP: I could answer your question but it would be long, technical and not very interesting.
Short Answer: Short-term negative. Long-term positive.
Real answer: a debate is one thing. Debates won't have any impact. Debates are fine. In my view the debt ceiling isn't constitutional. Debate that.
It's when stupid leaders grandstand by threatening the stability of the government that causes markets to buckle. Unfortunately, the Republicans are stupid.
Fools talk about "short-term" and "long-term" absent any discussion of particular people affected. If you're a year away from retirement, and your benefits aren't there for you, but they might be in 20 years, that's not much comfort. Many people near retirement age got slammed in the Bush downturn, and can't retire. Want to do that to another group of near retirees?
I have always been against the retire rehire ,like Tad Perry, as just doesn't seem right.
The retire rehire should never happen like the former school superintendent in Belle Fourche did. Teachers are government employees as well. I didn't see any comments about that, when the editor of madville knows the superintendent I speak of.