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The case for in-plan lifetime income solutions for DC plans is clear, so why the reluctance to implement? 

In Politics by Michael Rae

Defined contribution retirement plans are commonly criticized for their lack of a guaranteed lifetime income, but with the availability of annuity options for retirees, this concern is largely unfounded. Any retiree with a lump sum of money saved has access to a variety of annuities, even if having these products available internally in one’s employer-provided retirement plan may be preferable. Despite the value of in-plan guaranteed income solutions, signs point to a marked lack of these options in existing defined contribution (DC) plans.  A 2021 Black Rock survey indicates that 96 percent of 225 large …

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California should embrace large-scale water desalination projects

In Politics by Michael Rae

As the state continues to grapple with drought conditions, water restrictions are being placed on six million residents in Southern California. The latest restrictions are another reminder that the California Coastal Commission’s recent rejection of the Orange County desalination plant, after 24 years of delay, reinforces the state’s position as a laggard in adopting technology that could provide water security. While arid coastal countries worldwide are implementing desalination, the most obvious solution to water scarcity, the Coastal Commission unanimously voted against the Huntington Beach project. California Gov. Gavin Newsom, noting years of drought in the …

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The Teacher Retirement System of Texas needs to adjust its investment return assumptions 

In Politics by Michael Rae

Actuarial consultants recently presented their evaluation of the Texas Teachers Retirement System (TRS) assumptions to the system’s board. The consultants suggested that the public pension plan should lower its return investment return rate target, putting it in line with the national average return. The consultants advised the TRS board to reduce the pension return assumption from 7.25% to 7.00%, stating that “a 7.00% return assumption would be a longer-term hedge against market returns not meeting the 7.25% [target].”  The turbulence across financial markets to this point in 2022, with virtually all U.S. companies in the …

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Calls for Atlanta to cut bus services for transit-dependent riders in order to build rail for higher-income groups

In Politics by Michael Rae

Some transit advocates are complaining that the Metropolitan Atlanta Rapid Transportation Authority (MARTA) spends too much of its funding operating bus services. ‘Transit advocates upset with too much spending on transit’ might sound like an Onion headline but as reporter David Wickert detailed in the Atlanta Journal-Constitution, some of the region’s transit advocates worry that MARTA is spending so much money on bus operations that the agency will not be able to build new rail on the BeltLine, an industrial corridor encircling Downtown and Midtown Atlanta.  These types of arguments over whether to spend transit’s …

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Surface Transportation News: Private infrastructure financing growth, intercity buses rebound, and more

In Politics by Michael Rae

This issue of Surface Transportation News is also available online here. In this issue: New report on private transportation financeDOT’s Safe Roads & Streets for All ignores most traffic deathsIntercity buses rebound but are still the forgotten modeA new approach to tolling interoperabilityBattery-electric or hydrogen fuel cell for heavy trucks?News NotesQuotable Quotes New Report Documents Growth in Private Transportation Finance Transportation and other revenue-generating infrastructure are routinely financed, built, and operated by the private sector in much of Europe, Australia, and Latin America. But this kind of long-term public-private partnership (P3) is still the exception to …

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How school choice legislation has fared in 2022

In Politics by Michael Rae

Advocates of education reform hailed 2021 as the “Year of School Choice” as seven new school choice programs were created and 21 existing programs were expanded across 18 states. In 2022, more than double this number of states have seen legislation introduced that would expand educational freedom for families. But the rate of school choice policy proposals becoming law has slowed. Below is a look at notable school choice-related education reform policy wins and defeats in states that have already gaveled out of their legislative sessions for the year. Alabama In Alabama, the Parent’s Choice Act …

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Public retirement plan assets should never be utilized for political purposes

In Politics by Michael Rae

It is generally held as self-evident by most in the retirement industry that the primary purpose of any true employer-sponsored retirement plan should be to meaningfully support the financial security of employees in their retirement years. While many might think this is overly obvious, some trends in the public sector retirement space seem to be increasingly ignoring this basic tenet.  State executives and lawmakers from both major political parties have recently threatened to use public retirement plan assets to address political grievances or push political agendas. Issues ranging from guns to oil and climate change …

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California’s misguided bill to let parents sue for social media addiction

In Politics by Michael Rae

On May 23, the California Assembly passed the “Social Media Platform Duty to Children Act.” This bill would codify the existence of “social media addiction” and says that social media companies are responsible for the harms of addiction. The law would enable parents to sue social media companies for up to $25,000 should their child become “addicted.”  The Associated Press reports:  California could soon hold social media companies responsible for harming children who have become addicted to their products, permitting parents to sue platforms like Instagram and TikTok for up to $25,000 per violation under …

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Florida improves FRS Investment Plan, but more needs to be done

In Politics by Michael Rae

Recognizing a significant shortcoming in the Florida Retirement System’s Investment Plan (FRS IP), the state legislature recently took substantial action to address the problem by passing House Bill 5007, which was signed by Gov. Ron DeSantis last week. It is generally recognized that a defined contribution structured retirement plan needs a contribution rate of between 12% and 15% of a worker’s salary (where employees participate in Social Security) to produce an income that is likely to maintain the employee’s standard of living once they are in retirement. For teachers and most other non-safety public workers …

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Child care policy debates need more focus on the prominent role that informal care plays

In Politics by Michael Rae

Quality child care is unaffordable for many parents in the United States and barely affordable for many more. The average cost of center-based child care is over $12,000 a year. Daycare centers, however, aren’t getting rich, and they are usually non-profits or small businesses with razor-thin profit margins. Child care workers’ pay, on average, is low enough to fuel increasing controversy in its own right. Providers are regulated to the hilt, which increases costs and strains daycare centers, families, and workers alike. We might expect to find one or more interest groups guarding economic and …

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Examining the increase in traffic fatalities and surge in dangerous driving

In Politics by Michael Rae

In April, the National Highway Traffic Safety Administration (NHTSA) released preliminary statistical projections estimating that 2021 would set a gruesome record with 42,915 traffic fatalities, up 10.5% from 2020’s startling 38,824 road deaths and a 7.6% increase over 2019’s 36,096 fatalities. This troubling upward trend in dangerous driving during the COVID-19 pandemic must be analyzed to better understand the causes and evaluate the effectiveness of potential safety countermeasures. If there is any good news, it is that while dangerous driving remained elevated through 2021, a closer look at the data suggests the worst may be …