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Aug 2011
Guest View: Public pensions are not to blame

In response to your recent editorial, "Dems stall state on pension reform" (Aug. 15), the condition of public pensions in California is not a crisis despite the best efforts of pension foes and editorialists to portray it as such.

Elements of the issue are a concern: curbing pension spiking, ensuring public workers contribute a fair share of pension costs and pounding down the pensions of the small number of public workers who have outsized retirement benefits. What the editorialists don't say is that all of these concerns are being addressed here in California quickly and responsibly at the bargaining table, in the Legislature and by the public pension funds themselves.

State worker pensions make up just some 3 percent of the state budget, and that percentage is falling as the amount state workers contribute to their retirement continues to rise. Where they once contributed 5 to 8 percent of income, they now pay 8 to 11 percent. Formulas for calculating pensions have been reduced and stringent new rules are being established to eliminate abuses like spiking. In all, such changes - made through collective bargaining - have reduced state pension costs by some $600 million over the past two years.

The changes at the local level are equally dramatic. According to data kept by CalPERS, in more than 185 California cities, counties and local districts, public employees have agreed to increase their pension contributions, reduce formulas and lower public costs.

The truth, though, is that the vast bulk of public pensions are modest.

The average CalPERS pension is about $2,200 a month, and half of all retirees draw pensions of $1,500 a month or less. Moreover, as your paper itself reported in a recent editorial, new legislation authored by Democrats is bringing many of the most troubling pension abuses into check. Anti-spiking rules would be imposed on county pension funds that are not a part of the

CalPERS system, adding to CalPERS' already aggressive effort to curb this practice and pound down oversized pensions. Public worker organizations also actively support legislation to create pension reserve accounts that would be accessible during bad economic times, and to set a six-month waiting period before retirees could return to state jobs as part-timers.

Those opposing the current public pension structure claim that the only acceptable option is a wholesale shift to the sort of insecure 401(k)-type pensions now prevalent in the private sector. However, anyone with their pension savings locked into a 401(k) knows how precarious such a retirement plan is, with their savings and retirements at the mercy of markets that have grown ever more volatile.

Meanwhile, those seeking to cut public costs by cutting pensions should note that some 64 percent of CalPERS payments to pensioners in 2010 came not from taxpayers but from pension fund earnings on investment, which have averaged 7.9 percent annually over the last 20 years. Pensions paid to retirees by CalPERS in 2010 were $12billion, more than a three-to-one return over what taxpayers put into the fund that year. Those payments stimulated $26 billion in total economic activity and supported 93,000 jobs here in California.

There is a rising pension crisis in America, but it is not about public workers' pensions, which are much more modest than public pension opponents would have everyone believe. The true focus of pension reform should be on the crisis of private-sector pensions that have eroded at an alarming rate. This erosion allows public pension foes to play off the misery and frustration of private sector workers who have seen their pension savings shrink to nothing in an economy that throws away workers.

Fewer than one in five private sector workers have secure pensions, a low point in a decline that has been steady for decades. Only in this firestorm can the modest pensions for teachers and other public employees look large by comparison.

Paul M. Weber is president of the Los Angeles Police Protective League.



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