California's state and local governments should roll back pensions for existing employees, dump guaranteed retirement payouts and put more of the burden for pension benefits on workers, a bipartisan watchdog commission said Thursday.
Any attempt to reduce pensions for current workers would prompt a legal battle royal. Still, the 12-member Little Hoover Commission concluded that government pension funds are in such dire financial straits that they'll never right themselves without cutting into benefits for those working now. The proposal wouldn't affect benefits drawn by current retirees...
Public employee unions counter that guaranteed pensions make up for government's generally lower wages. They say the Little Hoover report and politicians like Dutton overstate the pension problem to pursue an anti-union agenda and undercut collective bargaining.
Six unions representing about 170,000 state workers have already agreed to contracts that offer lowered retirement benefits for new hires and increase what employees pay toward their pensions...
The report caps a year's research and a series of hearings that included testimony from actuaries, union officials, pension reform activists, retirement board members, labor union leaders, public employees and others.
It notes that the state's 10 largest public pension systems, including the California Public Employees' Retirement System, the California State Teachers' Retirement System and the University of California pension fund reported in 2010 a collective $240 billion spread between their obligations and assets.
"In another five years, when pension contributions from government are expected to jump 40 to 80 percent and remain at those levels for decades in order to keep retirement plans solvent, there will be no debate about the magnitude of the problem," the report says.
It's clear to all but the most rabidly partisan that the current model of public employee retirement funding is not sustainable and must change. How would you do it? How would you strike the necessary balance between promises made and the state's ability to keep those promises?
What sad times we live in. My UC retirements was funded largely by ME. I put in my money, year after year. It was true that UC matched those funds. They were wisely invested and are now there paying my pension. Today others are sticking their money into an IRA (sort of a crap shoot), and again employers match those funds. Same deal. Except the poor workers today need to bet their retirement on the market. Pick a bad mutual fund, eat dog food the rest of your life.
ReplyDeleteHowever, cutting pensions is corrupt, stealing. These funds look like public money. Not so. They are the result of many people working many years while they stuck money away for their retirement. Just what exactly wrong with that? Why would you think those funds are up for grabs?
I'm not sure I understand your question, Nicholas. What do you mean by "up for grabs"? Or "stealing" pensions? The point of this post is that what has been promised in pensions isn't supported by the money being invested in the pension funds. To use a fashionable word, what we have today isn't "sustainable".
ReplyDelete