Retirement Board report

by Dan Mirisola, Retirement Board President

We have been moving forward on two significant Retirement Plan issues.

An important benefit that fortunately most members will not use is the Family Death Benefit. This is a monthly benefit that goes to the family of an active member who dies before retirement.  Your employee-elected Board Members are looking into the costs of more than doubling the monthly Death Benefit to bring it in line with the comparable benefit in the City of LA Retirement Plan. We have just introduced this item, but it still must go through the negotiations process with the unions.

If retirees’ benefits remained constant, over the years inflation would eat away the value of their retirement. This would be unfair and unacceptable. So, every year, DWP pensions are subject to a cost of living adjustment (COLA), up to three percent, based on the Consumer Price Index. During periods of low inflation, this allows pensions to keep pace, but during periods of high inflation it is insufficient and retirees find their pensions decreasing in relative value.

During the 80s and early 90s, we went through just such a period of high inflation, and about 10,000 DWP retirees still have not recovered from it. We have taken a major step to correct this situation by approving a COLA of approximately 25% for retirees who saw their pensions eroded by high inflation. We did this under the authority of a 1990 amendment to the retirement plan; this change allowed such “catch up” corrections every three years. We found this option in the plan document, and we think the adjustment is long overdue. This should have been done long ago, in the early 90s, so retirees would not have been made to suffer. The money for this adjustment will come from the growing surplus in plan assets and will not effect the plan or its stability.

ALL THREE employee-elected Board Members — Lilly, Javier and I — attended an extremely beneficial training session recently. It was presented by the International Foundation of Employee Benefit Plans. We received certificates in Public Plan Policy and, more importantly, a deeper understanding of the issues facing us and the strategies that are available. Although all the Board members were invited to participate in this important school, only the three of us chose to participate.

A NUMBER OF PEOPLE have asked me if we are worried about the recent turmoil in the stock market, and the answer is definitely not. We are here for the long haul, and although our portfolio took its share of hits, we are still doing fine. Thanks to the first two quarters, when we did extremely well, the Retirement Plan has a surplus of about $400 million. We are quite confident of the long-term viability of the DWP Retirement Plan portfolio.

 

APRIL/MAY SURGE

Business Manager's report
President's report
Retirement Board Report
Business Reps' reports
Death of Members
Women's Conference 2000


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