New Jersey’s new lottery pension law is being considered a step in the right direction by Moody’s Investors Service, but it’s still not a large enough step to resolve the state’s issues with meeting its obligations to workers.

Moody’s the agency said the move is “slightly positive” for the state’s credit profile because it “all but removes the prospect of a complete pension contribution holiday going forward.” However, Moody’s points out that it will not change a whole lot for the system as the lottery floor only covers one-quarter of the state pension annual required contribution (ARC).

The lottery law—signed over the Fourth of July weekend as part of an agreement to end a brief government shutdown—transfers the revenue from the popular number-based games into the state pensions, helping decrease the risk of state officials skipping out on future pension payments.

Although the report has no impact on the state’s credit rating, Moody’s said that the law “reflects the state’s continued commitment to supporting its pension funds within the realities of its budget constraints.”

The state plans to pay $2.5 billion in the current 2018 fiscal year, then increase annually until 2023.

The chart reflecting the state’s 2018 funding plan and Moody’s report can be viewed below.

Tags: Chris Christie, lottery, Moody's, New Jersey, Pension

The Virginia Retirement System (VRS) posted a 12.1% return, net of fees, for fiscal year 2017, beating both the 11.8% policy benchmark and the 7% assumed rate of return, bringing the fund to a milestone $74 billion in assets.

For the period ending June 30, 2017, private and public equities—which consisted of $30.7 billion and $6.5 billion of the portfolio—returned 20.6% and 17.7%, respectively.

Real assets ($9.4 billion), returned 10.8%, followed by credit strategies ($13.1 billion) at 10.1%. The $1.8 billion strategic opportunities portfolio raked in 8.2% and fixed income ($12.4 billion) polished off the returns at 0.5%.

“In fiscal year 2017, most markets delivered robust returns,” the fund’s CIO, Ronald D. Schmitz, said in a statement. “However, we know market environments vary from year to year, and we will see returns above and below the 7% assumed rate of return. As a long-term investor, VRS focuses more closely on returns over 10-, 20- and 25-year periods and has exceeded the policy benchmarks for those periods, ending June 30, 2017.”

VRS paid out roughly $4.5 billion in benefits to more than 199,000 retirees and beneficiaries in FY 2017.

Tags: Fiscal Year, Pension, Virginia Retirement System, VRS

Ray Dalio will be making moves in the publishing world when his first book, “Principles,” releases on September 19.

In his 600-page book, the founder of the world’s largest hedge fund, Bridgewater Associates, will reflect on the principles that granted him success in life—and innovation as an investor—in an autobiographical manner. The publisher is Simon & Schuster.

“Principles” will also offer a business manual chronicling Dalio’s steps in utilizing these principles to manage Bridgewater.

“Principles” began in 2011 when Dalio uploaded a PDF collection of earlier versions of the book that existed as internal documents within the firm for free download. He constantly shares his famous principles when asked in interviews—and in 2013, he narrated, wrote, and published “How the Economic Machine Works,” a video which shows the driving forces behind the economy and why economic cycles occur in layman’s terms. In January 2015, he published the paper in three parts: How the Economic Machine Works, Debt Cycles, and Productivity and Structural Reform. Dalio also gave a TED Talk in April regarding the future and how people in it will be able to thrive in an ever-changing world.

“I believe in the idea-meritocratic process. I believe in specifying one’s principles clearly. I believe in radical truth and radical transparency to achieve meaningful work and meaningful relationships,” Dalio told Bloomberg Markets in a book release preview interview. “I wish it existed all over. I wish it existed in Washington. It’s the reason for our success—not me. I want to make it clear to pass it along, and then disappear.”

Dalio is also planning to release a second title with Simon & Schuster, which will focus on his closely guarded economic and investment principles. No publication date for Dalio’s sophomore book has been announced.

Tags: Book, Bridgewater, Hedge Funds, Principles, Ray Dalio

The California Public Employees’ Retirement System (CalPERS), with its $330 billion invested in more than 10,000 public companies, is again using its voting rights to effect changes that reflect its policies and principles during proxy season. 

The US’s largest public pension fund said it used its major influence on operations and corporate governance of companies so far this year, to bring them in line with CalPERS’ governance and sustainability principles, pension beliefs, and environmental, social, and governance strategic plan.

“We saw progress with victories in climate risk reporting and proxy access, which are main themes in our ESG Strategic Plan,” said Ted Eliopolous, CalPERS’ CIO. “The first step is to win the vote. Now, we will be engaging with these companies to ensure that they follow through with their responsibilities to their shareholders.”

According to CalPERS’ governance and sustainability principles, the system’s principles have evolved from a guide to proxy voting in public markets, to a broader statement of its views on best practices.

“As the governance and sustainability agenda has developed, so too have the CalPERS Principles,” says CalPERS. “An important area of development has been integrating consideration of environmental and social factors alongside our governance agenda.”

CalPERS said they demanded the implementation of climate risk reporting at major oil companies, including Occidental Petroleum, PPL, and ExxonMobil. The system also ran proxy solicitations at another 13 companies. According to CalPERS, the average level of shareowner support for shareholder proposals that went to vote in 2017 was 45%, up from 34% in 2016.

Among its proxy achievements in 2017, CalPERS helped pass resolutions at oil companies ExxonMobil and Occidental Petroleum that requires them to report on environmental risks and opportunities associated with climate change.  It also helped pass a proposal at Old Republic International Corporation that gave shareowners the right to nominate directors to the company’s board.

“We believe engagement is an important part of being a responsible shareowner,” said Anne Simpson, CalPERS investment director, sustainability. “Our intent is to create long-term sustainable value that will benefit the companies and our members.”

Tags: CalPERS, ESG, Pension, proxy voting, Ted Eliopoulos

US aggregate household debt balances increased for the 12th consecutive quarter in Q2 to $12.84 trillion, a $114 billion (0.9%) increase from Q1, according to The Federal Reserve Bank of New York. Household debt is now 15.1% above what it was just four years ago.

According to the bank’s Quarterly Report on Household Debt and Credit, mortgage, auto, and credit card debt rose 0.7%, 2%, and 2.6%, respectively. There was no change to student loan debt, and a 0.9% decline in balances on home equity lines of credit.

The report uses data from the New York Fed’s Consumer Credit Panel, a nationally representative sample of individual and household debt, and credit records drawn from anonymized Equifax credit data.

Mortgage balances, which make up the largest component of household debt, rose $64 billion from Q1 to $8.69 trillion as of June 30. Balances on home equity lines of credit were relatively unchanged at $452 billion, while non-housing balances were up in Q2. Meanwhile auto loans grew by $23 billion, and credit card balances increased by $20 billion.

The report said the rise in credit card balances is part of a persistent upward movement not seen since 2009.

“While relatively low, credit card delinquency flows climbed notably over the past year,” said Andrew Haughwout, senior vice president at the New York Fed. “The current state of credit card delinquency flows can be an early indicator of future trends, and we will closely monitor the degree to which this uptick is predictive of further consumer distress.”

Economists at the Federal Reserve Bank of New York said there were aspects of the household balance sheet that warrant close monitoring, such as a moderate rise in the number of credit cards issued to nonprime borrowers (credit score below 660), as well as an uptick in delinquency transitions for credit card balances.

Some of the major trends cited in the report include:

• Housing Debt. Mortgage balances increased, originations declined, and the median credit scores of borrowers for new mortgages declined slightly. Mortgage delinquencies improved, while foreclosure notations decreased and remained low by historical standards.

• Non-Housing Debt. Auto loan balances continued their steady rise from 2011, with an increase in auto loan originations. Median credit scores of borrowers for these new loans declined slightly. Credit card balances increased and the credit card serious delinquency rate remained flat. Outstanding student loan balances were flat, however, Q2 typically has slow or no growth in student loan balances due to the academic cycle.

• Bankruptcies & Delinquencies. Aggregate delinquency rates were roughly flat again. Bankruptcy notations increased and were approximately the same as the levels seen in Q2 2016. Although low by historical standards, early delinquency flows diminished, with student loans, auto loans, and mortgages seeing moderate increases. Meanwhile, credit card debt transitioning into early and serious delinquencies rose sharply from a year ago.

Tags: Federal Reserve Bank of New York, Household Credit, Household Debt, Mortgages, Report

The cities of Houston and Dallas have seen a surge in police retirements in 2017, a result of recent pension reforms for Texas retirement systems covering both cities’ law enforcement that resulted in reduced benefits for participants.

The Houston Police Department has had 362 officers either retire or trigger the retirement process during the fiscal year that ended June 30, which is the highest annual total for which records are available, according to the Houston Chronicle. Another 52 officers left the department voluntarily without having accumulated the years of service necessary to draw a pension check. That total number of resignations is approximately twice the amount that has been typical over the last decade. 

Meanwhile, in Dallas, 72 city police officers will leave by the end of August, said Dallas Police Association President Mike Mata, according to the local CBS television news affiliate.

“We’re losing some of our most experienced detectives,” said Mata. “The investigator you want to come out and solve that homicide, that you need to come out and solve that sexual assault.”

At the end of May, Texas Gov. Greg Abbott signed into law pension reform for both the Dallas Police and Fire Pension Fund and the city of Houston.

The Dallas pension reform includes a reduction to benefits, and the creation of a new retirement plan. Additionally, it calls for contribution increases from participants, and decreases to Dallas’ contribution rates.  The reform package for Houston, known as the Houston Pension Solution, reduces the city’s $8.2 billion in unfunded liabilities through a reduction of benefits.

Although the pensions reforms were signed in May, the workforce drain began at the end of 2016 as it became clear that pension reform in 2017 was becoming increasingly inevitable. According to Ray Hunt, president of the Houston Police Officers Union, 124 officers signed up for retirement in December 2016.

“We’re hoping that the additional cadet classes more than keep up with the loss of manpower,” Hunt said in a statement in February. “If each cadet class operates at its maximum capacity, we will more than make up for the retirements, many of which have resulted from pension recalculations.”

Sgt. John Pohlman, who had been the most senior officer among the Houston Police Department with 49 years on the force when he retired in June, said in February that “the pension situation has pushed me over the edge about waiting past July 1” to retire. “When I did the recalculation, I lost $1,200 a month if I don’t leave by the end of June. To be honest, the pension thing didn’t push me over the edge. It made me doggone sure I was going to leave.”

Tags: Dallas, Houston, Pension, Pension Reform, Police Department

Almost 37 million people will be affected once the UK increases its state pension age, according to data from the House of Commons Library and an analysis from Labour.

Of the 36.9 million pensioners, 56,547 are from Prime Minister Theresa May’s Maidenhead constituency, while 59,290 reside in Work and Pension secretary David Gauke’s South West Hertfordshire constituency, according to the Labour analysis.

The data from the House of Commons Library found that another 61,753 under the age of 47 are in Chancellor Phillip Hammond’s constituency of Runnymede and Weybridge.

The current plans will level the state pension age for men and women to 65 at the end of 2018. They will then rise to 66 in 2020, 67 in 2028, and will then cap off at age 68 sometime between 2037 and 2039. This will force those born between 1970 and 1978 to wait an extra year before they can receive their retirement benefits.

“Thanks to the Tories increasing the state pension age, 36.9m people will be forced to work longer, at the same time that evidence indicates life expectancy has stalled in some places and is reducing in others,” Labour’s shadow work and pensions secretary, Debbie Abrahams, said in an interview with the Independent. “Theresa May should answer her 56,547 constituents, and the 36.9m people across Britain, whose hard-earned retirements are being postponed because of her Government.” 

Tags: House of Commons Library, Labour, Pension, UK Pensions

The $4.7 billion City of Philadelphia Employees Retirement System saw stocks and equities help produce a 12.9% return for the year ended June 30, 2017, more than a point higher than the 11.5% benchmark.

Driven by gains from various Russell and MSCI indices, US equities, non-US developed equities, and non-US equity emerging markets were the top drivers of the fund’s fiscal year performance, achieving 19.6%, 20%, and 22.4% returns for the period, respectively. Three-year returns were 7.8%, 0.4%, and 1.4%, respectively. Five-year returns were 13.7%, 7.3%, and 2.6%, respectively. Only 10-year returns for the US and Non-US developed equity markets were available at 7% and 1%, respectively, as emerging markets have only been in inception since January 2009—and have provided 9.7% returns since then.

Absolute returns, which includes hedge funds, returned 13.5% in the fiscal year. For the three-, five-, and 10-year period, the class returned 1.1%, 4%, and 1.8%, respectively.

Real assets returned 5.7%, beating their 1.6% benchmark for the fiscal year, also steamrolling its -5.7% three-year benchmark at 0.2%. Public real estate reported 0.5% while private real estate reported 7.7% returns—on par with its fiscal benchmark, but under par from its three- and five-year benchmarks. Open-ended real estate has returned 2.2% since its January inception.

MLPs produced an 1.8% gain, returning -10% for the three-year period and 5.2% in the five-year period.

The only negative fiscal returns came from private energy/infrastructure at -1.9%. They were -10.5% in the three-year period, and 1.6% for the five-year period.

Rounding out the report was private assets, which returned 5.8% for the period ending June 30, 2017.

Tags: City of Philadelphia Employees Retirement System, Fiscal Year, Pension, Philadelphia