Former Assembly member Keith Richman is misguided in his attempts to place an initiative on the 2008 ballot that will cut pensions for newly hired teachers, nurses, firefighters, peace officers and other public employees. Cutting pensions and denying health care will make it harder to recruit and retain the very workers our communities need to keep us educated, safe and healthy.
For example, a teacher who works 30 years and retires at age 60 currently receives a pension of about $32,000, with full retirement health benefits. Under the Richman proposal, a newly hired teacher retiring at the same age would get $10,000 less in annual pension benefits and no retirement health benefits. Put another way, this initiative will cut the pensions of new employees by up to 60 percent, and will create two classes of workers: those who receive adequate pensions and health care, and those who don’t.
Public employees rely on their pensions more heavily than other retirees, since many of their employers don’t pay into the Social Security system. So while most of us get to enjoy some income from Social Security when we reach retirement, many public-sector employees will receive only their pension checks to pay for their housing, food and medical care.
And the new Richman’s initiative eliminates health benefits for new employees who do not stay on the job to their full retirement age. The measure penalizes those who are unable to work due to sickness, accidents or injuries. For example, a firefighter who starts at age 25, puts in 20 years of public service then suffers a serious illness would face two choices: retire early, lose his health care coverage and delay receiving his pension; or keep fighting fires while seriously ill. This is not a choice anyone should have to make–let alone a first responder who we are counting on for our safety!
This initiative also eliminates all pension and retiree health benefits for part-time employees, regardless of how many years they have been employed. About 30 percent of public employees–mostly women employed as cafeteria workers, school bus drivers, or instructional aides–would be denied pensions and retirement health care regardless of how long they have worked. Today, a part-time school bus driver working six hours a day, ten months a year, may retire with pro-rated pension and health benefits. If she retires at age 60 earning $30,000 after 20 years of work, she would receive $9,000 per year (that’s about $750 per month) in retirement income. But under this initiative, she will not receive any retirement benefits and would also be denied health care. That’s unfair, uncaring and just plain wrong.
Contrary to the charges by the author of the initiative, pension funds are doing very well. As the Wall Street Journal pointed out in January of this year, CalPERS assets have increased by over $100 billion, and the fund is now 90 percent funded. Currently, 75 percent of every pension dollar paid out by CalPERS comes from investment earnings, meaning that employers and employees pay only 25 percent of the cost. CalPERS pays for itself and at an 8.9 percent rate of return, does better than most defined contribution plans.
Defined-benefit pension plans are part of a sound and stable system that has benefited millions of working Californians. We are facing real problems in this state, but our problems stem from skyrocketing health care and drug costs that threaten the well-being of our families. All of us need health care we can afford to use, and we’re in the position to make that a reality for all Californians this year. We should take that step forward and not allow the further erosion of our hard-won benefits.
Slashing benefits for public employees is another Bush-like attempt to undermine the gains made by working families. So called “pension reform” is just part of a bigger move toward undermining retirement security for all workers, similar to the the privatization of Social Security.
Working families deserve the pensions they have been promised and health care they can afford when they reach retirement age. They shouldn’t have to take a gamble on whether their money will be there when they need it most.