Singing River Health

Singing River pension plan isn't only one lagging on funding

Employees of Singing River Health System aren't the only ones looking at pension plans that aren't fully funded.

The recession forced most states to cut back their contributions to pension plans for police, firefighters and other state and city workers. Mississippi's Public Employees Retirement System, or PERS, had the 12th worst state funding rate in the nation in 2013 when it was only 57.7 funded, well short of the recommended 80 percent to cover future payments.

PERS announced this week that the funding rose to 61 percent in the budget year that ended June 30 on stronger stock market earnings.

Hard numbers

PERS has 162,455 members and 93,504 retirees, who on average now retire at age 59.2 after having worked 23 years.

Social Security also is a pension plan, "Underfunded as we all know," said Stephen Gainey, a certified financial planner and co-owner of Hewes-Gainey Wealth Management Group in Gulfport.

He said most of the private pensions that companies once used to attract employees have been converted to 401k accounts.

"Pension plans put all the risk on the company," he said, on a promise to pay basis no matter how the fund performs. By switching to 401k, companies still contribute to their employees' retirement plans, he said, but the risk is transferred to the employees based on the returns on the 401k investments.

General Motors was given government approval to back out of millions in pensions during its restructuring and the Pension Benefit Guaranty Corp., a government agency, says on its website that if a pension is not fully funded, an employer like Singing River Health System can apply for a distress termination.

"To do so, however, the employer must prove to a bankruptcy court or to PBGC that the employer cannot remain in business unless the plan is terminated," the website said. "If the application is granted, PBGC will take over the plan as trustee and pay plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds."

PERS has taken steps to become more sustainable by increasing employer contributions six times, from 9.75 percent in 1990 to 15.75 percent and decreasing benefits for employees hired after July 1, 2011.

Tips for saving more

Gainey said the general rule for retirement savings is at least 10 percent of a person's salary, "And that's for a lifetime." Those who didn't begin saving in their 20s, and those who will lose part of their pension, need to put away more, he said. He recommends employees try to reduce their debt and put their money into a 401k retirement account that is matched by their employer and if they can, also contribute to an IRA.

In all his years as a financial planner, Gainey said none of his clients ever complained they retired with too much money.

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