Pensions

Issues Update

The August 6 Op-Ed in the Ventura County Star underscores why it’s important to understand the facts before stating an opinion. True to form, Thomas Elias misstates, misunderstands and misinterprets throughout his piece.

The following corrects the details Elias got wrong:

• Overtime is not included in pension calculations, so it is impossible for public workers to “spike” pay with overtime pay.
• This year’s returns will not cause larger than expected increases in employer contributions later this year. Any increase in contributions due to this year’s return will be assessed in one year for the State and Schools, and two years for Public Agencies. These increases will be very small as all gains and losses are amortized over a rolling 30-year period. CalPERS investment returns this year will not cause further bankruptcies.

We believe the recent Field Poll Elias cites in which 53 percent of respondents judge pension levels are “about right” or “too low” indicates Californians understand the importance of pensions and their role in our economy. The vast majority of Americans do not save enough for retirement and the very modest pension that most CalPERS members receive marks the difference between poverty and productivity in the golden years. Fifty percent of all CalPERS pensioners receive only $18,000 per year in benefits. Three-quarters receive $36,000 or less.

Ambitious borrowing during boom times and low revenues that came with the bust are the biggest factors behind bankruptcy filings. To put the cost of retirement benefits in perspective, Stockton pension costs are only about 6 percent of total city budget and San Bernardino’s are 10 percent of total city budget.

Many public agencies are already implementing the types of reforms that voters favor. Hundreds of cities and special districts have lowered benefit levels and raised the retirement age for new hires. Current municipal workers are negotiating with their employers to share pension costs by paying their own contributions. State members hired since 2011 also have a higher retirement age, and most current State employees pay more in contributions than they did two years ago.

CalPERS welcomes dialogue surrounding pension reform. We would all be better served if those placing blame on public worker pensions learned the facts before venturing an opinion.