Detroit— Officials with Wayne County's troubled pension system defended their investment performance at a board meeting Friday, saying new numbers show improvement.
The system is on track to make $77 million on investments with three months left before the end of the fiscal year, according to a financial report discussed at the meeting. That could offset a string of losses that have helped sink the Wayne County Employees Retirement System to a dire 50 percent funding level. Most systems nationwide are about 75 percent funded, according to one national study.
"We could really bounce back," Patrick Melton, pension board chair, said while discussing the numbers Friday.
The News reported this week that the system's value has sunk by $340 million since 2008, prompting finger-pointing among county officials. Pension board members blame County Executive Robert Ficano for reopening a defined benefit pension plan and offering lucrative early retirement incentives, including letting a 37-year-old retire with a $42,000 a year pension.
But Ficano's staffers blame bad investment decisions and urged the board to hire an independent financial adviser, which it lacks, unlike many public systems. A recent report found the system performance at one point was worse than 97 percent of similar public funds. The pension board started the search for an investment consultant on Friday.
"The actuarial attributes the vast majority of it … to poor investment performance," said Ficano spokeswoman June West.
But Melton disagreed, saying the system's investment losses — $136 million since 2008 — can't be the sole blame. "The majority is the increase in benefits," he said. "That played a huge role."
Ficano controls the pension benefits offered and the board administers them. The system's problems mean taxpayers will have to put another $35 million into the fund next year. In the last five years, the average county pension has increased 30 percent to $23,145.
Ficano opened a defined benefit pension plan to county employees that guaranteed a monthly payout based on years of service and pay in late 2008 in exchange for wage and health care concessions. Many employees used their county-matched 401(k) funds to buy into the guaranteed pension. West argues the decision "pumped an additional $150-$170 million into the pension fund."
Then last year, Ficano allowed appointees to waive an age limit of 55 for retirement and allowed them to buy — at a discount — as many as six of 20 years to qualify for a pension.
"I think it's a major stress on the system," pension board member Charles Bonza said Friday about the retirement incentives.
Another Ficano aide on Friday was able to retire under the lucrative early retirement offer.
The board approved the retirement of 52-year-old Hassan Saab, former Department of Public Services director. He'll make at least $82,000 a year in retirement, but that likely will increase after unused vacation and sick time is factored into his calculations, pension officials said. Saab was one of about 15 appointees who successfully sued after Ficano rescinded the early buyout deal in the aftermath of the $200,000 Turkia Mullin severance scandal.
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