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Don’t backslide on pension reform – Press Enterprise

In the “Good News, Bad News” category, the US economic recovery had a significant positive impact on CalPERS’s major investment fund, the Civil Service Pension Fund (PERF). CalPERS is the largest institutional investor in the United States and operates a pension program for over 2 million current and retired California civil servants.

Last week, CalPERS reported last year’s PERF rate of return at 21.3%. This is much higher than the previous year and is particularly strong after a year or more of a pandemic recession. (In February 2020, the value of the fund decreased by $ 15 billion in a week).

According to figures released by CalPERS, the total amount of PERF today is $ 475 billion, an increase of about $ 80 billion from last year. Investment performance, along with retirement benefit withdrawals and contributions from current employees and public sector employers, is just one of the factors contributing to PERF earnings.

This is good news for California taxpayers. Most of the state’s public pension schemes are “defined benefits” and retirees are guaranteed a certain amount. This is in contrast to a “defined contribution” plan that acts like a 401 (k) account that can be vulnerable to widespread market volatility.

The problem with defined benefit schemes from the taxpayer’s point of view is that even if the retirement fund does not have enough funds to cover them, it is still responsible for guaranteeing the payment of those promised benefits later. .. Due to the risk to taxpayers, many states have converted to a much less risky defined contribution pension plan from the perspective of taxpayers and employers.

Given that CalPERS has a terrible history of scandals and mismanagement, positive investment performance may help restore CalPERS’ reputation. Just last year, CalPERS Chief Investment Officer Yu Ben Meng resigned in a allegation that he had approved a $ 1 billion deal with a company in which he was a shareholder.

In 2018, the Chief Financial Officer was bounced on a misrepresentation of his resume. And in 2016, the CEO of CalPERS was sentenced to imprisonment for receiving a bribe from a former CalPERS director who was not tried for committing suicide.

Many of CalPERS’s previous problems were due to over-promised pension benefits, but unfortunately that remains the case. California has the most generous pension benefits in the country.

According to a Transparent California review, the number of people who receive more than $ 100,000 a year in pension benefits, the so-called “$ 100,000 club,” has increased by 173% since 2012. This does not include the manager of the city of Fontana who received the time credit. He has been working for thirty years to collect larger pensions and allow him to receive nearly $ 1 million in retirement benefits.

Well, the bad news. In the midst of the dot-com boom in 1999, CalPERS made a terrifying miscalculation. Believing that the rise in the stock market would continue forever, it sponsored Senate Bill 400 to boost profits. Investment returns averaged 13.5% over a 10-year period, with some state and school plans providing 100% funding. In other words, there was no unpaid obligation. ..

Without going into all the nasty details, it’s enough to say that the SB400 is supercharging pension benefits for most civil servants. Governor Gray Davis signed the bill seeking union support for his upcoming reelection campaign. Election fund records confirm that the civil servant union made a generous contribution to Davis’ campaign committee in 2002. The Prison Guard’s Political Action Committee has written checks totaling more than $ 1 million.

A few years later, the worst abuse from SB 400 was amended by a pension reform bill pushed by Governor Jerry Brown, certainly not all.

Taxpayers want CalPERS and our elected leaders to learn lessons from 20 years ago and refrain from making higher profits when the stock market is booming. A group seeking larger payments.

Already the news is not good. As a thorny development, D-Thousand Oaks lawmaker Jacqui Irwin has billed a parliamentary bill to examine certain pension spike practices taking place in Ventura County, despite pension reforms during the Brown era and decisions by the California Supreme Court. Proposed 826.

Don’t backslide on pension reform – Press Enterprise Source link Don’t backslide on pension reform – Press Enterprise

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