-slight of hand accounting hides the gravity of the current pension problems from the public
-taxpayers will have to make up the short fall if pensions don’t achieve their fairy tale expected return
-if costs are not cut, the eventual result will be a huge rise in taxes when pension funds run out of money
-the burden of paying for these pensions though higher taxes will fall on private sector employees who don’t qualify for such a gilded retirement package
-“spiking” of pensions in final year had to end & renegotiations have to happen[/quote]
1. Costs have already been cut. Employees will be making up the shortfall as well, and they’ve already been paying more into their retirement systems over the past few years. Gov. Brown’s reforms significantly increased the amount some employees will pay, while others have already increased the amounts via contract negotiations over the past few years.
2. The way these costs work, the taxpayers may or may not be spending any additional amounts. If pension contribution costs increase, it’s going to fall on the employees, too. If the employer’s side goes up, they might offset those costs with pay or other benefit reductions.
Again, “taxpayers” (and every public employee is a taxpayer who is paying at least as much as everyone else, especially since they are W-2), DO NOT pay the pension benefits to these retirees. The benefits are paid entirely from the retirement funds, and those funds are funded primarily by investment returns, employee contributions, and employer contributions. The “taxpayer” costs come from the employer contribution side for current employees, but those costs can be offset by other reductions.
3. The “fairy tale” expected return is the same return rate quoted by almost every single financial advisor out there when they tell you how much you can earn on your money. Historically speaking (and I do understand the danger in that), the current return assumptions are low.
4. Those “private sector” employees who no longer have DB pensions are SOLELY responsible for their problems. These idiots are the ones who bought into the lies that “unions are bad,” and that importing junk from China and other low-wage countries, and “trickle-down economics” would make them better off. They’ve refused to stand up for their rights, so don’t expect those who have done so to feel sorry for them. If they want to log complaints, take it to their capitalist/corporatist masters whose compensation and profit margins have been skyrocketing as the workers’ have been losing purchasing power and political power over the past few decades. You get what you ask for. If you don’t like how you’ve been treated by these capitalist parasites, fight back.
5. Yes, pension spiking needs to end, and Gov. Brown’s reforms have effectively put an end to this abuse. I still think there is more work to do (like tying the pension formula to average annual base earnings over one’s working career vs. highest/last 3 years), but at least they have put a lot more effort into eliminating the worst problems.
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And the #1 way to fix the pension problems in California? Repeal Prop 13 for every property except for a single primary residence. Taxpayers are subsidizing the profits of all landlords (from SFHs to large apartment complexes), land owners (think Pardee), and commercial/industrial building owners who are paying below-market taxes. This is far worse than any “pension crisis,” especially when you consider the fact that ~50% of the housing units in California are rentals.
