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Citing recent severe losses in assets, Moody’s Investors Services has downgraded the long-term credit ratings of the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS).

Both pension funds have been downgraded to a credit rating of Aa3, from Aaa.

“Today’s rating action reflects our expectation that the cumulative back-to-back market value declines in the investment portfolios of both CalPERS and CalSTRS for the fiscal years ended June 2008 and 2009 will exacerbate long-term projected actuarial funding shortfalls, recent market gains notwithstanding,” said Moody’s senior credit officer Martin Duffy in a statement.

The change affects the funds’ bond insurance programs, which collect fees for helping local governments gain access to credit.

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U.K. employers reduce costs with flexible benefits plans

Almost one-quarter of U.K. employers polled has reduced their benefits costs by introducing a flexible benefits plan.

Mercer’s survey of 135 U.K. employers finds that while 55% of respondents believed that setting up a flexible benefits plan would actually increase their costs, 39% of those with flex plan said their benefits costs were lower than they would have been without it and 45% said their costs had been unaffected.

“When put into practice, flex can be an effective vehicle for managing and reducing company costs,” says John Puddephatt, senior consultant with Mercer. “This is done by putting a limit on employer contributions to employees’ benefits packages. As costs increase, employees can elect to reduce their benefit levels, increase their own contributions or switch to another benefit.”

“From this research, and evidence from our own client work, we believe flex should be given higher priority as an option for managing company costs—given most companies are looking to make further cost reductions in the year ahead.”

Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com