CalPERS is shocked – just shocked – to find cities reeling under the burden of growing pension debt

By Steven Greenhut November 21, 2017

 

The California Public Employees’ Retirement System’s union defenders feign shock whenever pension reformers accuse it of “kicking the can down the road” in dealing with the state’s mounting pension debt. It’s like the scene from Casablanca, when Captain Louis Renault is absolutely shocked to find gambling going on in a gambling house.

 

CalPERS is never going to state the obvious:

“We know these massive, underfunded pensions are not sustainable, but we’re going to do everything possible to push the problem into the future and blame everyone else for the problem.”

But the pension fund’s board might as well have said as much after two actions it took at last week’s Sacramento meeting.

 

In one case, it decided to seek a legislative sponsor for a bill that would enable it to shift the blame to local agencies whenever such agencies decide to stop making their payments to the fund and retiree pensions are cut as a result. In the second case, at the urging of cities CalPERS decided to delay a vote on a more actuarially sound means of paying off pension debt – rather than risk a fifth rate hike to local governments, and risk a mutiny among hard-pressed local governments.

 

Both of these actions maintain the status quo and – you got it – kick the can down the road........t’s hard to feel too sorry for these struggling cities. Do you remember when they warned about the impending disaster if the state Legislature passed a 1999 bill, promoted by the California Public Employees’ Retirement System, that would retroactively raised pensions across the state by 50 percent? Do you remember when city managers angrily resisted union-backed efforts to raise pensions at their city councils?

 

Neither do I...........To Read More.......

 

My Take - The only possible solution to all of this is two-fold:  Get control of these plans out of the hands of the unions, and the government (along with businesses) need to get out of the  out of the retirement plan business.   Make the employees responsible for their own retirement plans, and the only thing to be negotiated is how much of a contribution the employer will make to the plan.   Some say that's not fair, but I say it's not only fair, it's profitable. 

 

Those plans will be owned by the employees, and there won't be special payouts for spouses (usually less money and even no money) when they die.  When both pass the money to those plans will belong to their heirs - not to the union, not the company and not the government.  Which is pretty much what it is now.  

 

The most important part of this is - elected officials who are dipping into union money to get elected and then in turn negotiate sweetheart deals with the unions are limited in how much damage they can do over the long term.