Ventura County citizens scored a victory earlier this month when a Superior Court Judge affirmed that any changes to the county pension plan must be made through the collective bargaining process — not at the ballot box. Actuarial analyses showed that closing the existing retirement plans and forcing new employees into risky 401k style plans would increase immediate costs to taxpayers, while forcing new employees to put their retirement security at risk in the hands of Wall Street.
The ruling reaffirms what public employees have been saying for years – there are existing mechanisms in place to make changes to public retirement funds. The place to do it as at the bargaining table, not by demagoguing public employees in a political campaign.
Public employees are paying more for their own retirement – at least 50% in most cases. New employees must wait longer before they can retire.
While the health of public pension funds has become a hot political issue in recent years, the facts simply don’t match the heated rhetoric coming from so-called pension reformers, many of which are propped up by out-of-state billionaires looking to make a political name for themselves in California.
The fact is, Gov. Brown and the Legislature did pass meaningful pension reform in 2012. While doomsayers were busy crying that the sky was falling, California quietly went about its business, moving to shore up public pension plans by asking public employees to do contribute more and receive less.
And that’s exactly what happened.
Public employees are paying more for their own retirement – at least 50% in most cases. New employees must wait longer before they can retire. The state has curbed pension spiking and set a cap for retirement payments, putting an end to pension spiking and ending six figure pensions.
That hasn’t stopped the Chicken Littles on the right from continuing to say the sky is falling. Even though the state’s largest investment funds have reduced their projections on future return of investment, the voices of the right say it’s never enough.
Let’s look at the facts. CalPERS is currently projecting a 7.5 percent annual return on its investments. Critics call that “unrealistic”, suggesting an unrealistically low 3 percent figure. The system yielded a 13.3 percent return in 2012, and over the past two decades it has earned an average of 8 percent every year – even taking the Great Recession into account.
Over a 20-year period prior to the recession, from 1988-2007, the average individual mutual fund investor saw annual returns of just 4.48 percent, according to Dalbar, a financial market analyst.
Who would you rather have in charge of your retirement portfolio, CalPERS or the Wall Street bankers who raked in billions in fees while creating the financial crisis?
Other changes may need to me made to address specific retirement plans, but those changes should be made at the bargaining table – a compromise between employees and management – not forced upon workers by out of state billionaires looking to make political hay.
There is no one more interested in strengthening the public pensions system than the public employees who are counting on pensions to retire. After all, public pensions are the only source of retirement for 30% of public employees since they do not receive Social Security. Pension plans also play a vital role in decreasing poverty among older Americans, according to the National Institute for Retirement Security.
Now that the state’s budget has recovered, we hope to be able to have a more reasonable discussion about retirement security. Instead of trying to scapegoat one group of public servants, we should be having an honest discussion about ensuring retirement security for all Californians.
We are still facing major economic issues in this state, despite our top-line recovery. The gap between the billionaires and working families has never been wider, and more than 25% of Californians are living in poverty. While we continue to create jobs as we recover from the Great Recession, the kinds of jobs we’re bringing back are lower-paying than the ones we lost during the recession.
Those realities are going to create growing pressures on Californians going forward. We look forward to a thoughtful discussion of where we are, and how we can strengthen our collective economic future, and ensure a secure retirement for all Californians.
Ed’s Note: Dave Low, the executive director of the California School Employees Association, is the chairman of Californians for Retirement Security.