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Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
Media Relations, Incident Management_Rose
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Media Relations, Incident Management_Rose

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2010 Fall Seminar Presentation - Eric Rose, Englander, Knabe & Allen

2010 Fall Seminar Presentation - Eric Rose, Englander, Knabe & Allen

Published in: Business, Economy & Finance
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  • 1. Media and Incident Management Pensions After Bell by Eric W. Rose
  • 2. The Face of Pensions • Increasingly the issues underpinning pension battles are being debated – and decided – in the court of public opinion • The best approach to communications is to ensure control over your reputation and communications
  • 3. Bell Changed the Debate • The pension battle has now morphed from: – The benefits are too generous” – To “The benefits are too generous AND unrealistic return rates and valuations of the pension funds are a huge problem threatening the stability of public entities". – Elected officials are to blame
  • 4. Current Situation The public debate has shifted dramatically in three key ways: 1. Pension funds themselves are now the story 2. How pension funds determine assets and liabilities - is now the story 3. How pension funds invest to meet their liabilities – is now the story These three issues are just a few of the launching pad issues for further attacks!
  • 5. Times Have Changed It’s Time to Pivot • No longer is it simply “the employer promised too much” • You and your staff are now considered an integral part of the problem
  • 6. The Headlines are NOT Pretty • The media is talking about pension reform… DAILY • Nationally and locally, newspapers are saying: – “The Current System Is Plainly More Than The State Can Afford” – “We Need A New System With Much Less Generous Pensions”
  • 7. Attacks on Pensions in the Newspapers • If California Is Ever To Emerge From Its Budget Crisis, Something Must Be Done To Lower Pension Costs • Pension Reform Faces Tough Fight • California Has An Unsustainable Public Employee Pension System That Will Lead To Fiscal Collapse Of The State Unless Major Reforms Are Made Soon • California Must Reign In State Pensions To Avoid Fiscal Collapse • Lawmakers Have An Obligation To Place The Interests Of All Californians Above Those Of Public Employee Unions
  • 8. Pension Bomb Ticks Louder California's public funds are assuming unlikely rates of return. The time-bomb that is public-pension obligations keeps ticking louder and louder. Eventually someone will have to notice. 2010 Headlines Stanford students ‘rock’ public pension funds A group of graduate students used “risk-free” bonds, rather than stocks and other potentially higher-yielding investments, to calculate what a New York Times story called a “hidden shortfall” in CalPERS, CalSTRS and the UC Retirement System. State plans' false hopes may have high bill State pension funds' wishful thinking could turn into the taxpayers' worst nightmare. If state pension plans cannot earn their actuarial assumed rates of returns, taxpayers will have to put tens of billions of dollars more into the funds.
  • 9. Underfunded Teacher Pension Plans: It’s Worse Than You Think This paper focuses on the crisis in funding teachers’ pensions, because education is often the largest program area in state budgets, making it an obvious target for cuts. 2010 Headlines The Market Value of Public-Sector Pension Deficits States report that their public-employee pensions are underfunded by a total of $438 billion, but a more accurate accounting demonstrates that they are actually underfunded by over $3 trillion. Payback Time: Public Pension Funds Are Adding Risk to Raise Returns States and companies have started investing very differently when it comes to the billions of dollars they are safeguarding for workers’ retirement.
  • 10. Public Pension Deficits Are Worse Than You Think • How can municipalities assume an 8% rate of return? • Pension plans for state government employee’s today report they are underfunded by $450 billion, according to a recent report from the Pew Charitable Trusts. • US public pensions face $2,000bn deficit – The US public pension system faces a higher-than- expected shortfall of more than $2,000bn that will increase pressure on many states’ strained finances and crimp economic growth, according to the chairman of New Jersey’s pension fund.
  • 11. Myths Have Become Reality • You are an informed audience, and know that many of these stories are wrong. What does the public know? • A Google search for pension critics “Joseph Rauh” and “Andrew Biggs” combined with “public pensions” revealed the following: • Joseph Rauh and his critique on the assumed rate of return… 2,200 times • Andrew Biggs and his critiques on public pensions… 21,900 times
  • 12. Should I Respond to Blogs or Ignore them • Social Media Staggering Influence on Journalists • Social media drives content decisions for the traditional press and influences the way reporters and editor’s research and write news.
  • 13. The Facts are Staggering • 89% of journalists source stories from blogs • 65% of journalists use Facebook and LinkedIn for research • 61% of journalists rely on Wikipedia for information • 52% of journalists use Twitter
  • 14. The Facts are Staggering • 62% of journalists are now required to write specifically for online news sections • 39% of journalists are now required to blog • 37% of journalists are now required to have a Twitter account • 52% of bloggers now consider themselves journalists (up from 33% in 2009)
  • 15. The Opponents “Appear” Credible • The opponents cite “academic papers” and professors. • The public expects if there was another side, they would hear it. • Your employers are not the experts in pension finance. • The pension funds who have the expertise to present the facts, remain silent – very little editorials or push back to false information – public thinks what they are hearing must be true
  • 16. What Can You Do? • Provide members and the public with facts/figures in ways people can understand • Rule #1: Be Transparent & Honest • Is your website up to 2010 standards? – Is information readily available about the operation of your pension fund on your website? – Do you have a media room? – Can you educate the public without your message being filtered
  • 17. Fight Back with Facts Facts you should know: • Average CalPERS pension is $25,000 per year. • Half of CalPERS retirees receive $16,000 per year or less. • Seventy-eight percent of retirees receive $36,000 per year or less.
  • 18. Get Ahead of Critics with FACTS • The public assumes taxpayers provide all the money in a pension fund. • Have you told the public the facts about the source of the money in the pension fund? On average, every dollar paid to public pension fund retirees comes from three sources • Investments 70 - 75% • Employers 15% • Members 10% If you don’t tell the public this—who will?
  • 19. Need to Fight Lies with Facts • Stanford University and the Reason Foundation • Wrongly concluded pension funds use overly optimistic assumptions • Stated pension funds should use a risk-free investment return assumption. • Professors are now calculating when your pension will run out of money, using these widely understated return rates as the basis
  • 20. The Result: Myths Have Become Reality • Conjured up a half-trillion-dollar liability • Planted the falsehood that pension funds are hiding trillions of dollars of liabilities.
  • 21. Return Rates: Factual Rebuttal at your Fingertips • The Public doesn’t understand why you chose your return rates • Can you explain the basis of your assumed rate of return in an understandable paragraph? • Can you explain why the return rate the opponents use is unrealistic, in a paragraph? – The public needs to understand how choosing unduly low/pessimistic return rates will affect taxpayers – Can you explain the cost to your employer—right now---should you adopt those return rates
  • 22. Historical Return: Factual Rebuttal at your Fingertips • Have you calculated how your fund would have done investing in the risk free 10 year treasury the opponents use • Have you calculated how much more money you have earned---i.e., saved the taxpayer---with your investment program over a long term period such as 10, 15, or 25 years? • The next slide is an example of what you need to create
  • 23. Valuation of Your Assets • You use actuaries and sometimes arcane “accounting/reserving” schemes to value your assets and liabilities. • Opponents make a simple argument---you should use “market value” for everything. • Can you explain, in one paragraph of understandable English, why your valuation “scheme” is both correct and appropriate?
  • 24. What Now? • Proper messages need to be developed, calculated response must be given, and your members credibility and image must be protected • You need to lead the conversation rather than chase it • If you are explaining you are losing • When one party attacks, and their charges go unanswered, they control the narrative and in short order their arguments begin to be accepted as true.
  • 25. “It's not enough to rage against the lie. You've got to replace it with the truth.” Bono (famous philosopher) What Now?

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