The World of Multi-Employer Benefit Funds Podcast

Meet Russell Kamp, Managing Director for Ryan ALM and author of the Kamp Consulting Blog

August 30, 2019 Season 1 Episode 4
The World of Multi-Employer Benefit Funds Podcast
Meet Russell Kamp, Managing Director for Ryan ALM and author of the Kamp Consulting Blog
Chapters
The World of Multi-Employer Benefit Funds Podcast
Meet Russell Kamp, Managing Director for Ryan ALM and author of the Kamp Consulting Blog
Aug 30, 2019 Season 1 Episode 4
Tom Shanklin and Traci Dority-Shanklin
Russell Kamp is an advocate for pension reform and legislative efforts in Washington, D.C.
Show Notes Transcript

Russell Kamp is an advocate for pension reform and legislative efforts in Washington, D.C. frequently writing and speaking on the subject.  If you ever wanted to understand why pension fund reform is important to our economy and to get an easy to understand explanation of the proposed legislation, you need to take the time to listen to this episode.  Russell Kamp shares in this interview a compelling reason to push our legislators to act.

 

You can also gain valuable insights and education about defined benefit pension funds, through his blog www.kampconsultingblog.com.  



Speaker 1:
0:01
[inaudible].
Speaker 2:
0:03
This is the world of multiemployer benefit funds podcast with your hosts, Tom Shanklin and Tracy Dordy, Shanklin managing partners at c sue investment partners. If you're interested in labor and union benefit funds, well you've landed in the right place. We are a go to source for all things union benefit fund related and we are going to bring you interviews with key decision makers and fund professionals that guide these plans. They'll share their insights, experience, unique perspectives, all of the latest developments and tips to unlock the mysteries of multi employer benefit funds. The time is short, so let's get started. Please welcome Tom and Tracy. Russell camp is the managing director for Ryan Alm, which he joined in July, 2019 at Ryan Alm. Ross is responsible for sales, marketing and client service. Russ has 38 years of experience in the [inaudible]
Speaker 1:
1:01
higher than industry. Prior to joining Ryan Alm, Ross was the managing partner for camp consulting solutions, which was a full retainer asset and liability consulting firm focused on providing services to define benefit and defined contribution plans as well as endowments and foundations. Russ is a passionate advocate for pension reform and legislation efforts in Washington DC frequently writing and speaking on the subject. Prior to launching KCS, Russ was a senior vice president and director of asset management for two sigma investments where he helped launch a long only business. Before joining to sigma, Russ was a CEO of Invesco's quantitative strategy group. I Q s was a quantitatively oriented equity alternative and global macro investment group that managed more than 30 billion for institutional clients. Russ began his career as an analyst for Janie Montgomery Scott Investment Management Control Division and asset consulting firm that was later acquired by evaluations associates where he became a senior vice president, senior consultant and partner serving the defined benefit community.
Speaker 1:
2:24
I met Russ at the 2017 core path conference, which is a coalition of pension fund professionals that work to perpetuate, protect, and expand defined benefit pension plans as well as educate members on issues critical to the current and future health of pension funds. Russ was a speaker at this conference and provided insights and a clear explanation of the proposed pension reform legislation. I've been following his blog camp consulting blog sense and find, he is a wealth of information on the subject, so I know will learn a lot from this conversation today. Russ, thank you for being with us and let's get started. The world of multi-employer benefit funds podcasts, unlocking the mysteries of multiemployer benefit funds.
Speaker 3:
3:14
We like to start all of our interviews by having you tell us about how you became involved with Labor and a little bit about your career path.
Speaker 4:
3:22
Oh, certainly a, I'd like to say it all started when I was a stock boy to the amp and had to join a a union when I was 15 years old, but that would be a bit of a stretch. I was extremely fortunate, uh, in my capacity as the CEO for Invesco to manage a number of mandates for pension systems in the multiemployer space. However, I really got into it in a pretty meaningful way. When Ron Ryan of Ryan alm invited me to participate alongside him and John Murphy's effort to get past the Butch Lewis Act. Ron and I became two of the eight members who ended up presenting to both Senate and house staff in d c last April. And it was probably one of the highlights of my career.
Speaker 3:
4:09
That sounds fascinating. And I'm going to back up just a second and then we'll get into presenting with Ryan. But my parents, my dad was the international president of the United Food and commercial workers, which was originally the retail and represented a and p. And my mom and my dad actually met when she was a clerk at AMTE. Oh, that's wonderful. So tell me a little bit about that experience. You say it's a highlight of your career. So I'd really like to hear what was so unique and special about getting to be involved on that level.
Speaker 4:
4:47
Well, unfortunately, uh, as a participant in this industry for a long time, you get so focused on the specific job or mandate that you have that you often lose focus on the bigger picture. And that certainly was the case for me. It really wasn't until I set up kcs back in August of 2011 that I became more profoundly, uh, knowledgeable about the crisis that was potentially falling on the beneficiaries in participants of these struggling pension systems, particularly within the multiemployer space. And I looked at that and I said, you know, there's something wrong here. We who, you know, manage money or consult or who are actuaries or custodians and a number of other practitioners have benefited tremendously from the pension system, but the people that we're supposed to be serving are struggling. And then we pass legislation like metro in which we allow for beneficiaries to see significant cuts to their pension payouts on a monthly basis.
Speaker 4:
5:55
And I just said there's something wrong with that. But I had gotten a chance to really do something about it. So when Ron asked me to join him and John Murphy's coalition, it was really an extraordinary opportunity. And I'm forever thankful to both Ron and John for getting me involved. It was very enlightening. It fulfilled something that I'd always wanted to. I had gone off to Fordham University a hundred a hundred years ago as a poly psy economics double major, but it really never done anything with regard to the poly side part of it. And, uh, so this was really a great opportunity for me, both personally and professionally to get involved.
Speaker 3:
6:34
So can you give us a general understanding of what role legislation like Butch Lewis plays and pension and health and welfare reform?
Speaker 4:
6:45
Oh, certainly. I mean, we've, we've experienced tremendous legislation and the impact from that for decades now. I mean, certainly predating, even Arista and butterbur. So there's certainly a milestone in the effort to try to protect and preserve these defined benefit plans. And I think for the most part, legislation has been very powerful and very positive. You know, I questioned Metra only because it allowed for the slashing of benefits for these participants who have done nothing wrong. You know, they've had, um, hourly wage increases, deferred to fund retirement contributions. They've made those contributions regularly out of their paychecks and now all of a sudden we're going to tell them that, uh, you know, we can slash benefit payments up to 50% or more. I just find that just tasteful.
Speaker 3:
7:35
So the balancing act between the slashing of the benefits and the sustainability of these funds, I mean is there something that we can be doing to drive legislation that would help mitigate that?
Speaker 4:
7:53
I believe there was Tracy and you know, I've, I've written a lot and spoken about the Butch Lewis Act and I know there are other pieces of legislation that are out there and I know that HR three 97, which is the Butch Lewis Act recently passed through the house and it's now sitting within the Senate and I'm led to believe that there are going to be most likely significant amendments to that, which I find unfortunate. But the legislation that is being proposed within three 97 I think is the way that we need to go. These plans are really strapped for cash in the near term. I mean, they're all cashflow negative. We're not just talking about central states and the miners, which are two of the most notable of plans in that condition. But you know, when we first started looking at this, there were 114 critical and declining plans. Today that number continues to grow and it's probably close to 130 and then you have on top of that, probably another 200 or so critical plans that could easily fall into that critical and declining category.
Speaker 4:
9:01
So we need to have the help of the u s government to close that underfunding, either the cashflow that's necessary over the next five 10 15 years. There's just no way and not enough time that investment returns are going to make up for that deficit. So we need to have a partnership. You know, we have public private partnerships with regards to infrastructure all the time. Well, this is going to be a classic example of a public private partnership to help preserve the benefits for these individuals who don't have a tremendous amount of resources outside of their pension plan. I mean I, I am knowledgeable in many cases of people and their stories because they've shared them with me and it's really frightening. Which falling onto these poor people at this point in time,
Speaker 3:
9:51
you mentioned 130 plans in critical status. Do you know approximately how many individual participants this impacts?
Speaker 4:
10:00
Sure. Right. So those hundred and 30 plans represent about 1.4 million Americans at this point that could potentially see benefits slash tremendously. As I mentioned earlier, I've been, I'm writing a blog for quite a few years now and the teamsters organization around the country members have found my blog and have used it to provide, you know, education and research to their membership. And as a result, people have been sending me their stories and it's really heart wrenching. I mean, there's a woman by the name of Carol who I've written about on several occasions who affective this past January. So her benefits slash from $2,160 a month to only eight 63 I mean more than 60% and I just don't know how our government can sanction such an action. And so we really do need this partnership. And the only way we're going to get it is to have the federal government come in, provide low interest rate loans to the struggling plans that will close that gap, help to guarantee that the benefits that have been promised will be paid, and to extend a lifeline for the remainder of the assets to do their job. And that's really the critical element. These loans will bridge that funding gap in the short term and allow for the residual assets to continue to work, generate the returns and help meet future liabilities down the road. But what it does is it takes the burden off of the shoulders of the PBGC or the government right now, and it extends them by 30 years. That's quite a significant lifeline, uh, and it does a tremendous amount to help preserve these benefits.
Speaker 3:
11:46
So looking at the bigger picture, what do you say to the general public who is going say, I don't have a plan. Why should I help save these other plans?
Speaker 4:
11:59
Well, I mean, we hear that all the time. There's definitely pension envy. I wish I had a defined benefit plan. I've never been a participant in one. Uh, I've solely relied on a defined contribution plan to help my retirement. But there's a difference between somebody who's spent 38 years in the business who has somewhat of a clue as to how to go about doing this. It's also maybe a little bit of financial wherewithal to accomplish the objective for most people in this country. I think it's silly to think that, uh, we can make portfolio managers out of all of them and that's what we basically have asked to them. We were asking them to fund, manage and then disperse a retirement benefit with really no knowledge to accomplish that objective. I just think it's for policy plus defined contribution plans were never designed to be anybody's primary retirement. They were solely a supplemental income to bridge the gap of middle managers who didn't have enough time to participate fully in a defined benefit plan. So it's, we've taken something that was going to be helpful to some and tried to make it beneficial for all. And I think it's been a, an unmitigated disaster that's just going to continue to unfold in that way.
Speaker 3:
13:09
Is there any ramification to the economy if these plans start falling? I mean, we know that the PBGC, it's already stated that if the top three plans, and you mentioned central states were to go under and the PBGC had to absorb it, that we would basically bankrupt the PBGC. So we know that can happen. That aside, what is the bigger, more macro effect of these plans going under?
Speaker 4:
13:40
Oh, there's going to be tremendous impact and it's going to be more than just the loss or the benefit. You have a situation where you have 1.4 million Americans receiving a monthly paycheck and we know for a fact that between 80 and 85% of the net pay out gets spent locally. So you're talking about a significant impact on the local economies. Were all of these beneficiaries live. The second thing is that if in fact these pensions fail and you're right, if the PBGC does not have the resources to meet those future applications, and in fact the former executive director had come out and said that with the collapse of central states or the miners or the confectioners, that uh, it was very likely that people would get about 5% of that guaranteed pay out and the guaranteed payout, unfortunately it's only 12,008 70. So even if you were expecting a pension of 25,000 because the current a guarantee is only 12, eight 70, the 5% is not on the 25. It's on that 12, eight 70. So we're talking about just pennies. You know, you might be able to go out to dinner once a month and that would be the full of benefit of your a pension. It's just crazy. It really is. I'm totally unfortunate
Speaker 3:
14:55
what happens to individuals and the economy of the pension reform can't be achieved in a timely manner.
Speaker 4:
15:04
Well, what we've seen in a relatively short period of time, as I mentioned before, when Kyren first did the math on the critical and declining plans, there were 114 and that was basically the spring of 2017 since that period of time, despite the fact that markets have risen, we've seen another roughly 16 plans fall into the critical and declining status. And again, we have roughly 200 additional critical plans. So God forbid we see another down turn in the equity market like we saw on the fourth quarter last year. You know, you could have a meaningful correction, really impact of the funding for a lot of these systems. And we're 10 plus years into a bull market for equities. We're in 30 year bull market for bonds and yet we have terrible funded status. And if we ever looked at these plans on a true mark to market basis, the funding of course would be even more dramatic in terms of just how poor it is.
Speaker 3:
16:07
Can you give us a brief understanding or just a little background on how these plans found themselves in this issue? You know, but because of I guess pass legislation that kind of tied the hands of these plans?
Speaker 4:
16:22
Well, sure. I mean there are a number of factors. You know, it's, you have certainly the equity crashes of 2000 to 2002 in 2007 to early 2009 that probably have had the most negative impact. But you also had situations where pension holidays were forced on to these plans that were an overfunded status back in the late nineties. And so contributions that should have been made that would have enhanced the surplus and helped to mitigate this underfunded situation. Now they were forced to take a 13th check or enhanced benefits. I mean there were a number of actions that were taken that reduced funding in the short term and did not allow for these plans to, to really, um, build up, um, kind of a rainy day fund for when these markets a tank. But you also have industries that have gone through major changes. I mean, obviously the transportation industry has seen tremendous shifts over time.
Speaker 4:
17:21
And so there are a number of factors that come into play. But I also think unfortunately that for many of us and this industry, our approach has been inappropriate. You know, in the 1950s and sixties, many of our defined benefit plans were run in a far more conservative fashion where fixed income and cash were the name of the day that these plans were run almost like lottery systems where you knew what the liability was in the future and you dedicated assets to them and totally immunized these plans so that those liabilities were met with little volatility. We have had major shift and some of it is related to the decline in interest rates. And so people think that the roa or the return on asset assumption is the ultimate objective. And how are you going to achieve that in an interest rate environment where the tenure treasurer's at one 53 but the problem is that because we've moved away from fixed income and cash to help meet future obligations, we've put into place asset allocation mixes that are just tremendously volatile.
Speaker 4:
18:27
And when you're striving for 7%, with roughly 75% in, um, you know, equities of some form, whether they be domestic or international public equities or private equity, real estate, venture capital, whatever it might be, you're injecting just tremendous risk and that volatility has come back to really haunt these plans. Um, because when you've gone through major periods of decline, uh, you would happens next is significant increases in contribution rates. And whether you're talking about, um, you know, a plan that's struggling or a plan that's healthy, in many cases, the additional contributions can't be afforded. And so that creates a lot of problems too.
Speaker 3:
19:06
Yeah. So you mentioned HR three 97, um, otherwise known as the Butch Lewis Act that's now in the Senate and was passed by the house. Can you give us a brief understanding of the act and its importance? I think we've, we've touched on it, but I think a little summary of what it will do and can do to help with sustainability of these plans.
Speaker 4:
19:33
Certainly it would be my pleasure to speak to this. I, I, you know, I've looked at some of the other legislation that's out there and I honestly believe that HR three 97, the Butch Lewis Act is by far the most optimal, what it calls for is the federal government to establish a new agency within the U S Treasury Department call the pension rehabilitation administration. Once that has been formed, the struggling pension plans can actually file for a loan. Now the loan amount isn't just whatever they want. The loan amount is based specifically on what it would take to totally defease the current retired lives. Those are the lives that have that, that are best known. They're the ones that are currently being paid out. And uh, it's easy to identify what that total cost is. That loan amount will be based on a true mark to market us treasury strip amount to determine what that loan, so they file for a loan based on what it would take to defease that liability.
Speaker 4:
20:36
And once that loan is approved and they received the proceeds, um, they are not allowed to just inject those proceeds into a traditional asset allocation, which, you know, in many cases, pension obligation bonds, I've done that for years. They are forced to the fees that liability through one of three strategies. They can take that sum of money and buy an annuity from a third party provider, which is a little bit expensive. They can then engage in a traditional, uh, LDI type strategy, which is not precise or they can use a cash flow matching immunization strategy, which both Ron Ryan and I think is the most, uh, ideal situation because it's the most exact. And those proceeds then get invested into some type of fixed income portfolio. The liability is no longer really on the books. The remainder of the assets now will be used to meet future liabilities.
Speaker 4:
21:32
And, uh, we have just bought time. So you've extended the investing horizon for those assets. Good news also is that any plan that had actually filed for benefit relief under Macra will reinstate the original benefits that had been promised, which is really exceptional contributions. Must be made at the appropriate annual required contribution. Uh, there are no games here that can't cut benefits, but they can enhance benefits while the loan is out. The plan pays interest on that loan. And that here's the good news too, which I failed to mention. The loan is going to be offered to these plans at a 30 year treasury rate plus 25 basis points. So we're talking about our environment right now where the 30 year treasuries in the low twos, you could be borrowing 30 year paper for something on the order of 2.3 to 2.35%. So it's a perfect time to be taking out a loan to, um, to try to fortify these plants.
Speaker 4:
22:32
So for the first 29 years, they're in a be paying just interest on the loan and then in year 30, they will make a balloon payment. Now, when Kyren, who was the actuary that Murphy had hired to do his analysis, they determined that 111 got the original 114 were going to be able to meet their current retiree benefit payments, the future benefit payments that the balloon payment and the interest all along plus do that and only needing a six and a half percent rate of return. So with the median return somewhere on the order of 7.5 these plans were actually going to be able to operate at a much lower risk profile. There were three plans that were still going to need some PBGC assistance. We've already talked about those at central states, the miners and the confectioners, but the total amount that the PBGC would need to give them in terms of grants is far less than what they would have a beyond the hook for. God forbid that these hundred and 14 to 130 plans just went bust that some would be close to 70 to 100 billion. At this point in time.
Speaker 1:
23:40
You mentioned there is potentially a compromised version of this going into the Senate. Do you have any insights
Speaker 3:
23:46
as to what it looks like or what might be eliminate it from the original proposed legislation?
Speaker 4:
23:55
I don't think that, you know, many of the details have gotten out right now, but what concerns me is when the Butch Lewis back was first filed before the a hundred and 15th Congress in November of 2017 nothing was done on it until about February or March of 2018 at that point in time, Congress set up a joint select committee that was going to look at not only the Butch Lewis Act, but other pieces of legislation. There were eight Democrats and eight Republicans. There were eight senators and a congressman, and they were supposed to conduct interviews each month until September of last year and then work through until Thanksgiving to come up with a piece of legislation that could basically be supported by both parties in both houses. Now, unfortunately, what was floated at the end of November last year was really I think pretty weak. And it put a lot of onus on reducing the discount rates to a mark to market rate increasing PBGC premiums.
Speaker 4:
24:58
And so what ultimately came out was that not only were they looking to secure the struggling pension systems, but they were trying to put in fixes for, you know, every pension system, whether they were healthy or not. And in the process we're going to harm a lot of the healthy plans. And that was, I found totally disconcerting because that be by forcing them to adopt a mark to market a accounting for their liabilities, they were going to be dramatically reducing the funded status on a lot of these plans and forcing then companies to ramp up contributions. And so I thought that instead of addressing the current weakness among the a hundred and you know, say 30 critical and declining plans to try to resolve all of the issues going forward, I thought it was just inappropriate. And I'm afraid that that might be what's going to happen in the Senate.
Speaker 4:
25:53
We can't afford not to have legislation come out these plans, God forbid, weeks or another market decline. Many of these plans we just go bust a and the beneficiaries would fall onto the social safety net, uh, as it is. And so if people are concerned about the impact that this program might have on the taxpayer, it's going to be far worse. If all of a sudden you have 1.4 million Americans falling onto the social safety net with no promise of payback, at least in this particular case, this loan program looks like we could see, uh, as you know, a significant percentage of these plans being able to meet that obligation so that it becomes just a loan and not a bail out. So
Speaker 3:
26:32
you mentioned healthy plans and with the recent market volatility and recession concerns, what concerns do you have for these healthy plans?
Speaker 4:
26:42
Well, I'm concerned that we're really the same old, same old. You know, as I mentioned earlier in our conversation, you know, there was a time when pensions were managed more like lottery systems where you had a future obligation that you knew and you were able to discount that future obligation back into present value dollars to determine which you needed to fund that thing in total. And so there was almost no volatility associated with those plans. We've gotten into a situation now where it's kind of like almost like a major league baseball where it's either you strike out or you hit a home run, there's nothing in between. So we've injected a tremendous amount of risk into a process in trying to achieve a rate of return that might be a little bit outside of what you know should be expected as a result. You know, we've loaded up on a whole bunch of equities and private equity and in an alternative investments, you know, grow more broadly. And I just think that that's no way to run a game. It's too critically important to the participants that the promise that was made is actually fulfilled and to, you know, playing this game as if it's a game of roulette. Uh, I just don't think it's appropriate.
Speaker 3:
27:54
So because there's so many of these defined benefit plans in, you know, in a critical state and we don't see as many employers even creating these plans. Is there a time when they just, they evolve or they cease to exist in their current, I mean, we were seeing issues with them. So I'm guessing that there may be other ideas or developments out there that are going, that will replace these plans, if you will. And, um, have you seen any or heard any of the conversation around that? I know there was the hybrid plan that was hot around 2008 after the housing crisis. So are you seeing anything that shows any promise or,
Speaker 4:
28:39
uh, well, there are a number of alternatives out there. I mean, so right now, uh, you know, we've seen corporate America basically exit pension game. Um, you know, there's a small percentage of the fortune 500 that's still offer an active plan. And so the alternative for, uh, most people in corporate America today is the 401k plan. There are people in the marketplace right now and I, and one of the gentleman who comes to mind is David Blitzstein, who's a former head of the UFC. W uh, David has been working, um, to help plans adopt, um, a hybrid defined benefit plan where the benefit is adjusted on an annual basis based on performance. And this has some merit. I mean, I think it's certainly a superior alternative to the defined contribution plan because these plans are still going to be professionally managed. There's still going to be an annuity that's paid out on a monthly basis as opposed to having individ individuals try to determine how much they could spend on a monthly basis.
Speaker 4:
29:41
Well, um, you know, maintaining some corpus to meet future obligations. So there are alternatives out there, but there seems to be a reluctance on the part of people who currently have a defined benefit plan to make that decision. They would prefer to try to maintain the status of the DB plan. And um, I think the only way they're going to be able to do that, particularly those that are in critical and declining status is to hopefully have legislation passed. What I think helps with the hybrid plan is that the contributions are much more consistent and so more easily budgeted. So the benefits, uh, that are received may be a little bit more volatile, but the fact that the employer can actually manage the contributions without having to see these major swings is probably something that they, uh, very much appreciate.
Speaker 3:
30:33
Do you think that defined benefit plans will survive really, you know, critical phase that they're in, in their evolution?
Speaker 4:
30:42
I hope so. Um, I think it's a superior retirement vehicle to anything else that's out there, but I think something needs to be changed. And so one of the implementations that I mentioned before is the use of the cash flow matching strategy to meet near term retired lives. I think that just changing that focus, getting away from a single asset allocation geared to a return on asset assumption and adopting an asset allocation that's more bifurcated where a portion of your portfolio meets their retired lives obligation with, you know, starting with next month's benefit payment. It does several things. First of all, it converts your current fixed income exposure in which in many cases is you know, 20 to 25% of the portfolio into something that's going to work for you as opposed to potentially against you. There's no interest rate sensitivity associated with a cash or matching strategy.
Speaker 4:
31:37
So liquidity is enhanced them you benefits your fixed income, uh, which is highly interest rate sensitive is reduced. And at that point in time you have a situation where you've extended the investing horizon now for the balance of your assets to meet future obligations. And so I think that there are a number of benefits to adopting this. So bifurcated asset allocation as opposed to just swinging for the fences and trying to achieve a return on asset assumption. So you know, what we've been recommending to people is that they tried to build a cashflow matching portfolio that would meet the next 10 years of obligations as a plan sponsor. It would be so comforting I think to be able to go to your beneficiaries, your participants and say, hey listen guys, you know, the next 10 years of benefit payments are totally secure. No matter what happens in the marketplace, we have the cash flow on a month to month basis to meet the next 10 years.
Speaker 4:
32:32
I think that that would be comforting for everybody. And that's why when we talk about the different implementations under the Butch Lewis Act that most of us prefer the Castro matching strategy to the other two alternatives. And I think, you know, before we all were, we see all these plans fall into that critical and declining status. I think something can be done to try to mitigate some of that risk. And when you think about it, when we look upon the impact of 2007 early 2009 on the enf space, all those folks who had adopted the Yale model, well many of the returns were, you know, negative returns were exacerbated by forced liquidity because they had been so heavily into alternatives that they had no means to meet their current obligations. Well we don't want to see that obviously happened within defined benefit plans. And so I think that uh, adopting more of a focus on what that liability looks like and managing against that liability as opposed to a made up return on asset assumption is the way to go.
Speaker 3:
33:30
So it sounds like it's really is going to take some re-education and keeping people from having a knee jerk reaction of throwing out the baby with the bath water, so to speak, of throwing out something that can work. But we have to get away from the actuarial assumption in terms of solving for that we need to be solving for the liability. Is that a clear enough understanding of what you're proposing?
Speaker 4:
33:54
What's often the case? Is that because we're so focused on the return on asset assumption, we forget what that liability looks like. What was that promise that we made? And managing against that promise, I think is, is of the utmost importance. I mean, can you imagine playing a sport, uh, where you know what your score is and you know that you're in the latter stages of that game, but you have no idea what your opponent has scored. It's Kinda tough to adjust both your offense and defense knowing or not knowing exactly what it is that you have to achieve. So that's Kinda like how pensions are being operated right now we're in a situation where, or most of the time these folks don't know what that promise looks like. Uh, certainly not on anything, uh, more frequently than once a year. And usually three to six months delayed by the time they get the next actuarial report. So we just think that, uh, we need to get our arms around the promise that's been made. We need to manage against that promise and we need to do things differently from an asset allocation standpoint to help preserve these plans because they are so critically important.
Speaker 3:
34:56
I couldn't agree more. Um, well that was all I had. Is there anything that you would like to add that maybe I have missed?
Speaker 4:
35:05
Well, thank you, Tracy. You know, I think, um, I think we've covered most of the important issues of the day. The bottom line is that, uh, we have roughly 10 million folks in total who are in these, you know, 1300 or so multiemployer pension plans that are relying on us as an industry to do the very best that we can. And I think that we have a lot of well meanings, individuals who have participated for many years and trying to do the very best, but because we're doing the same old same old and it's not working, I think we collectively to do something different and without doing something different to try to help us stabilize these plans. I'm fearful that we're going to have at least 1.4 million people, if not more, fall onto the federal social safety net, which is going to be a heck of a lot more expensive than if we just provide loans for the next 30 years with a high degree of confidence that those loans will be repaid. So hopefully we can get our, um, legislators in DC to come together or you know, for the benefit of these people and to pass legislation that's just so critical right now.
Speaker 3:
36:13
And is there anything that we can do, um, in this community? I mean, we're speaking mostly to people who work with and the defined benefit framework. Is there something we can be doing to driving this, the direction of the legislation?
Speaker 4:
36:28
Well, we all live in districts that are represented either by members of the house or our senators. Uh, and I think it's important that they understand the impact. I think they need to see what their decisions do on a day to day basis to these poor people who are going to see benefits slash tremendous. They need to read and hear about the carols of the world who through no fault of their own, uh, were given a promise and that promise has basically been broken and we just can't allow that to happen. It's just in a country, uh, as, um, wealthy as our country to see us do this to these individuals I just think is inappropriate.
Speaker 3:
37:07
I could, um, so Russ, as, as I expect it, you are a wealth of information and I know that some of our listeners are going to want to hear more from you and can you get us the information on your blog so that some of, if anybody wants to subscribe they can get more.
Speaker 4:
37:28
Oh, I w at first of all, I would love to hear from those that have the opportunity to listen because I learn everyday from people who challenged my thoughts. And so thank you for this opportunity. Uh, I write under the blog post camp consulting blog, so it's k a m p consulting blog.com. And I've written at this point in time about 650 articles or posts, uh, all related to pensions. And mostly related to the social and economic impact that our failure to achieve success will cause. So, uh, we'd love to, um, have others, um, reach out to me and engage in a conversation and hopefully all of us together can, um, finally work to secure the promise benefits to everybody.
Speaker 3:
38:14
Applaud that. I would love to see that happen and I will put all that information in our show notes, so please look there. And with that we will close today's episode. Thank you so much for listening and stay tuned for our next episode
Speaker 2:
38:31
and that's it for this week's episode of the world of benefit funds podcast. We would love to hear from you and if you have any comments, questions or suggestions, head over to www.ccuinvestmentpartners.com and let us know, Tom and Tracy, thank you for joining us and we look forward to next time for even more information and resources head over now to www.cclinvestmentpartners.com and get involved.
Speaker 5:
39:03
Yeah.
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