California's Pension Nightmare
An Associated Press article (entitled "Pension
system downgrades earnings target"
- December 24, 2016) concerning California's Pension boondoggle points out:
"CalPERS now pays out more each month in benefits
to its retired members than it earns from cash and investment earnings."
CalPERS
and CalSTRS (pension system for teachers) have a common thread: They each lack sufficient money
to pay for pension benefits workers have already earned. These pension funds have a combined unfunded
liability of more than $200 billion.
The
alarming reality is the California taxpayer will ultimately pick up the tab for
any losses or shortfalls to the system. You
might ask, "why, does our government bodies (Sate, County & City) have to
pick up the tab for this outrageous public retirement system?! Or the better question: "If we have Prop 13, which sets rules for tax increases and we, the
voting public, did not have opportunity to vote for the Public Employee Pension
Program, how can we be liable for this massive pension deficit?"
This
is what you might call an indirect or "hidden
tax." Your city, county or state has
entered into agreement with employee unions which established an unrealistic
pension formula. The public employee
pension is not calculated in accordance to actual contributions made, as is the
case with social security, but instead offers the reverse formula whereby the
participant can be awarded retirement based upon a percentage (2 or 3%) times an
average of his highest income years, times the number of years served. An actuary is then employed to determine how
much must be contributed to the fund in order to pay for this retirement when
it comes due.
The
majority of Californians retired under social security in which they matched
funds with the employer at the rate of 6.2% of their wage. In comparison, the public retirement system
requires the government (that means you and me as taxpayers) to kick in as much as 30-to-40% in addition to the
salary; whereas, the government employee may contribute as little as
7-to-9%.
I would suggest, at
the very least, the government, as an employer, should have to pay no more than 10%
toward CalPERS Pension and if the public employees want to retain this
ridiculously expensive program, they can pay the remaining cost no matter how
high it is.
The
afore mentioned AP article points out the Board members of the California
Public Employees Retirement System has represented an investment return far
superior to the actual amount and has done so for years. This, in addition to the economic downturn,
has led to a huge pension deficit.
It
should be noted the CalPERS board is dominated by public employees who will
benefit from the pension system and the other board members include Democratic
appointees who might have received significant campaign contributions from
government labor unions.
Even on a local level involving cities run by the "so-called" City Manager
style government, pension negotiations are headed up by persons who will
benefit directly from favorable negotiations with the employee unions.
No matter how you
study it - this is outrageous!!! It is little wonder that several California
cities have filed for bankruptcy.