Milwaukee County Retirees Could Lose COLA Increases

A pension reform task force has suggested eliminating the 2% annual cost-of-living increases received by thousands of Milwaukee County retirees’ until 2036 to help strengthen the county’s struggling pension system.

The Milwaukee Journal-Sentinel reported that the proposal from the Retirement Sustainability Taskforce, which was launched by Milwaukee County Executive Chris Abele, comes as the county’s unfunded liability has grown to at least $550 million. It also said the portion of the payment designated for the unfunded liability alone has risen to $53.23 million in 2018 from $10.23 million in 2012.

The taskforce is made up of representative of employees, organized labor, retirees, the business community, elected leaders, taxpayers, and county officials. It includes the existing members of the internal county workgroup that started to review the option of joining the state pension. The goal of the taskforce is to study larger pension system modifications and develop recommendations to Milwaukee County on pension system modifications that should be considered.

The taskforce also suggested that future employees should be covered by the Wisconsin Retirement System instead of the county pension system, and recommended the county study the possibility of also moving recently hired employees who are not yet vested in the county pension system into the state pension system.

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The taskforce will send the proposals to Abele and the Milwaukee County Board.

Moving future and recently hired employees to the state retirement plan would cost $10 million to $15 million, Teig Whaley-Smith, Milwaukee County’s administrative services director, told the Journal-Sentinel. He added that the expense could be offset by the $20 million in savings that would result from eliminating the 2% annual cost-of-living increases automatically given to retirees.

The county pension system’s growing liabilities have been attributed to lower-than-expected returns from pension fund investments. As a result, the county will lower its projected rate of return on investments to 7.75% in 2019, and might lower it even further, according to the Journal-Sentinel.

Tags: Milwaukee County, Pension, Retirement Sustainability Taskforce

Shinzo Abe, Japan’s prime minister, wants to raise the nation’s retirement age past 65 to help surmount the economics of its declining population and a growing debt bubble.

“In the next three years,” Abe said in an interview with Nikkei Asian Review Monday, “I intend to overhaul the social security system to give peace of mind to everyone—children, parents, active workers, and senior citizens.”

He said the increase in working careers would help economic growth, tax revenue, and more social security premium receipts. He also argued that if people chose to work past age 70, they would receive more money when they collect their retirement benefits.

Over the coming three years, Abe said he would devote significant attention to labor issues. The next two would see the prime minister focus on Japan’s pension and medical care problems. “Private consumption will be stimulated if working generations have less anxiety about their futures,” he said.

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In recent years, Japan has been plagued with a shrinking number of births combined with a rapidly aging population. The population is dropping by about 300,000 per year, according to worldometers.info, and is expected to fall further. The country also has a high life expectancy, averaging out at 85.5 years, the second-highest in the world, according to Geoba.se.

That means a lot of pension payments, and not enough workers to pick up the slack.

Abe is six years into his second term as prime minister, and could become Japan’s longest-serving prime minister if elected for a third three-year term. He is currently competing against Shigeru Ishiba, a former defense minister, in a ruling party leadership contest on September 20. Abe represents the conservative Liberal Democratic Party, which he led to five consecutive national election victories that were followed by economic growth and a stock market boom.

Part of that growth has seen more women working as well as a spike in employees over 65 (to 23.5% from 19.9%). The prime minister also said he would find a way to soften the impact of Japan’s planned consumption tax hike for October 2019, to 10% from 8%, with “bold countermeasures.”

Abe was also dismissive of US trade policy. He said that the US and Japan share “a broader goal of expanding bilateral trade and investment for the benefit of both countries and achieving a free and open Indo-Pacific based on fair trade.”

Tags: Japan, Pension, Retirement Age, Shinzo Abe