CalPERS report undermines Gov. Jerry Brown’s pension overhaul plan
CalPERS has a new report that says California Gov. Jerry Brown's idea to alter pensions with 401(k)-style plans won't help new workers and won't save California money, either.
The California Public Employees Retirement System is the nation's largest public pension fund, and its new report undermines Brown’s efforts to change California’s pension system -- which the governor insists is unaffordable and unsustainable.
CalPERS found that while some schools and local government agencies will probably save money, the expected savings to the state are “generally not significant.”
Central to the debate is the fact that current workers’ contributions help pay retirees’ benefits. If new hires begin paying into 401(k)-style plans, that reduces the overall contribution pool and taxpayers will be on the hook for the difference.
The CalPERS report was requested by the Legislature, which is considering Brown’s proposal. Legislative leaders have said they are committed to changing the system, but that commitment will be tested in the coming weeks and months as their political allies in organized labor ratchet up opposition to the governor’s plan.
Notably, the report only evaluated one element of Brown's 12-point pension proposal. The governor also would require that all public workers have at least half the cost of their pensions deducted from their paychecks. (Most state employees already make that contribution, but many in cities, counties and school districts across the state pitch in far less.) And he has urged that the retirement age for most new public workers be raised from 55 to 67.
Until last week, a Republican-led group was pushing to go to the ballot for changes that would have gone beyond what Brown has proposed to reduce pension costs. The group dropped its initiative campaign though, saying the attorney general's title and summary of its ballot measure made it nearly impossible to pass.
-- Michael J. Mishak in Sacramento
Photo: Gov. Jerry Brown outlines proposals to roll back public employee pension benefits during a news conference at the Capitol in October. Credit: Rich Pedroncelli / Associated Press