If public employees agree to split the cost of their retirement plans with taxpayers, the savings would begin immediately and at every level of government, from the state general fund to the local mosquito abatement district. Public employee unions can take credit for contributing to a bipartisan solution when they ask voters to approve higher taxes and reject paycheck protection – and their members keep every dollar of their benefits.
The Legislature has until June 28 to put a constitutional amendment on the November ballot that would require all state and local government employees to contribute one-half the cost of their pensions. Future employees would be eligible for a hybrid plan that includes a defined benefit (pension) component, but with limits. The balance of the governor’s plan can be enacted through legislation.
Paying half of pension costs won’t be a shock to teachers and state employees – most pay half or close to half today. But thousands of local government employees retire at 55, collect six-figure pensions and lifetime health care benefits, and contribute nothing to their retirement plans.
California’s biggest and best companies pay half when they match their employees’ 401(k) contributions. It’s not unreasonable to ask public employees to do the same. Almost all of the immediate savings that can be expected from pension reform is derived from employees paying half.
There is disagreement over retirement ages, but the solution is simple: Tie state retirement ages to Social Security. Early retirements should be limited to public safety employees who perform physically demanding jobs and those who can’t work due to illness or injury. Others who want to retire early should plan ahead and save more.
We can no longer afford to party like it’s 1999, and it’s time to clean up the mess from the most expensive mistake in California history. Senate Bill 400 is the source of many of today’s horror stories about salaries padded to increase pensions, retroactive benefit increases, double-dipping and “holidays” from employee contributions. The University of California didn’t wait for the new millennium; UC employees didn’t contribute to their retirement plans for 19 years.
Union leaders are right to complain about the common misperception that government employees are all collecting Cadillac pensions. Teachers have generous, but far from excessive, benefits – especially when compared with correctional and CHP officers who retire at 55 with benefits worth $2.2 million. We’re grateful for their service, but we like FBI agents, too, and they retire with benefits worth $600,000 less.
Public pensions must be fixed now, not two years from now. The Stanford Institute for Economic Policy Research reported in February that pension costs for cities and counties are increasing two and three times faster than spending on public safety, education, health and social programs. Government services are being cut to the bone while pension costs go nowhere but up.
Barring legislative action or an economic miracle, pensions are on track to consume 17 percent of the state general fund, according to former Assemblyman Joe Nation, co-author of the Stanford report. Cities and counties already spend that much.
While we wait for the return of 20 percent annual investment gains, the shortfall between pension obligations and resources grows by billions every year. It’s why the word “unsustainable” is used so frequently when the subject is pensions. CalPERS is 60 percent funded, and local pension plans are 54 percent funded. The federal government will step in when a private pension plan falls below 80 percent funded, but public retirement systems aren’t subject to the same rules.
The Legislature has an opportunity to fix one of California’s most vexing and expensive problems. More than 80 percent of the public would celebrate with you. Let’s get it done.
Read More Here http://www.sacbee.com/2012/04/14/4412907/when-it-comes-to-pensions-we-cant.html
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