OT: California Prison Academy: Better Than a Harvard Degree

[CA renter]

[quote=bearishgurl][quote=pri_dk]The public pension employees will get the full benefit, as required by law. Whose money will be used to make up the difference? (Hint: It’s not the sh!tcanned fund manager, who was probably chosen by a public employee in the first place.)

Now if someone in the private sector loses money in their 401K because their money was mismanaged, who is on the hook to make up the shortfall?

Keep trying, maybe you’ll get it eventually…[/quote]

Actually, pension fund managers are chosen by retirement boards, which are comprised by law of one active public safety employee, one active non-safety employee, two retired employees, two local business owners or local CEOs (or one of each) and one elected official (usually a county supervisor). There has to be a quorum and majority vote on any decision.

pri_dk, try not to come off sounding like a dk unless you know what you’re talking about ;=][/quote]

Nice job, BG.

[CA renter]

[quote=pri_dk][quote=CA renter]The largest pension funds are obligated to pay out benefits according to contracts, but most of their funding is NOT from “taxpayers.” Employees pay a portion, employers pay a portion, but the majority comes from investment returns. If the investment returns end up being insufficient, they can always extract more from the employees.[/quote]

No, they cannot. That’s the fundamental problem. And you got it completely wrong.

Your first sentence above contradicts the last one. The pension funds do not have to extract from the employees because the contract specifically states how much employees must pay in. If the state goes back to the employee to make up the shortfall, it is a breach of contract, and the employee unions will be quick to point that out.

[/quote]

Wrong. The pension funds can require higher employee contribution rates. It can either be done through contract negotiations between the employer and employee unions (in some cases), or it can be done through legislation.

I’ll go into the relationships between the employers, employees, and pension funds — in order to explain how the obligations work — later tonight.

[CA renter]

[quote=pri_dk][quote=CA renter]The largest pension funds are obligated to pay out benefits according to contracts, but most of their funding is NOT from “taxpayers.” Employees pay a portion, employers pay a portion, but the majority comes from investment returns. If the investment returns end up being insufficient, they can always extract more from the employees.[/quote]

No, they cannot. That’s the fundamental problem. And you got it completely wrong.

Your first sentence above contradicts the last one. The pension funds do not have to extract from the employees because the contract specifically states how much employees must pay in. If the state goes back to the employee to make up the shortfall, it is a breach of contract, and the employee unions will be quick to point that out.

[/quote]

Wrong. The pension funds can require higher employee contribution rates. It can either be done through contract negotiations between the employer and employee unions (in some cases), or it can be done through legislation.

I’ll go into the relationships between the employers, employees, and pension funds — in order to explain how the obligations work — later tonight.

[CA renter]

[quote=pri_dk][quote=CA renter]The largest pension funds are obligated to pay out benefits according to contracts, but most of their funding is NOT from “taxpayers.” Employees pay a portion, employers pay a portion, but the majority comes from investment returns. If the investment returns end up being insufficient, they can always extract more from the employees.[/quote]

No, they cannot. That’s the fundamental problem. And you got it completely wrong.

Your first sentence above contradicts the last one. The pension funds do not have to extract from the employees because the contract specifically states how much employees must pay in. If the state goes back to the employee to make up the shortfall, it is a breach of contract, and the employee unions will be quick to point that out.

[/quote]

Wrong. The pension funds can require higher employee contribution rates. It can either be done through contract negotiations between the employer and employee unions (in some cases), or it can be done through legislation.

I’ll go into the relationships between the employers, employees, and pension funds — in order to explain how the obligations work — later tonight.

[CA renter]

[quote=pri_dk][quote=CA renter]The largest pension funds are obligated to pay out benefits according to contracts, but most of their funding is NOT from “taxpayers.” Employees pay a portion, employers pay a portion, but the majority comes from investment returns. If the investment returns end up being insufficient, they can always extract more from the employees.[/quote]

No, they cannot. That’s the fundamental problem. And you got it completely wrong.

Your first sentence above contradicts the last one. The pension funds do not have to extract from the employees because the contract specifically states how much employees must pay in. If the state goes back to the employee to make up the shortfall, it is a breach of contract, and the employee unions will be quick to point that out.

[/quote]

Wrong. The pension funds can require higher employee contribution rates. It can either be done through contract negotiations between the employer and employee unions (in some cases), or it can be done through legislation.

I’ll go into the relationships between the employers, employees, and pension funds — in order to explain how the obligations work — later tonight.

[CA renter]

[quote=pri_dk][quote=CA renter]The largest pension funds are obligated to pay out benefits according to contracts, but most of their funding is NOT from “taxpayers.” Employees pay a portion, employers pay a portion, but the majority comes from investment returns. If the investment returns end up being insufficient, they can always extract more from the employees.[/quote]

No, they cannot. That’s the fundamental problem. And you got it completely wrong.

Your first sentence above contradicts the last one. The pension funds do not have to extract from the employees because the contract specifically states how much employees must pay in. If the state goes back to the employee to make up the shortfall, it is a breach of contract, and the employee unions will be quick to point that out.

[/quote]

Wrong. The pension funds can require higher employee contribution rates. It can either be done through contract negotiations between the employer and employee unions (in some cases), or it can be done through legislation.

I’ll go into the relationships between the employers, employees, and pension funds — in order to explain how the obligations work — later tonight.

[CA renter]

I’m not a pension expert, but do know a bit about how some public pension plans work in California. I’m most familiar with the CalPERS and CalSTRS systems (the individual employers, like the City of San Diego, can have their own plans, and these can vary greatly from one employer to another). Here’s how the large pension systems work, in general, in California.

If an employer chooses not to have their own pension fund, they can contract with CalPERS or CalSTRS to administer their pension/benefit plans. The obligation, in this case, is between the employer and the pension fund. Employee contribution rates are set by law, which I believe currently caps them at 9%. Employer contribution rates are set periodically, based on actuarial calculations determined by CalPERS, and based on benefit options chosen by the employer.

The mix of employer and employee contributions are often negotiated when contracts are renewed, and employers can “pick up” (pay) a portion of the employee contribution, or they can increase the contribution rate that the employees pay. They can also increase the amount the employees pay, over and above what is “normal” (the fully funded rate) based on actuarial valuations, and can over-fund their pensions, based on my understanding.

The pension obligation lies between the pension fund (CalPERS) and the employees. The pension obligation is NOT from employer to employee, but from pension fund to employee. The obligation to the pension fund is from the employer to the pension fund, but the employer does not directly pay the employees’ retirement benefit — the pension fund is the one obligated there.

When you hear about the iron-clad, “guaranteed” pensions, you are hearing about the *benefits* that are guaranteed to the employees by the pension funds. These benefits cannot be taken away.

What is not set in stone is the contribution rate. This can change, and is often changed during contract negotiations. The cap on employee contribution rates can be changed by the state legislature.

An example (of MANY) where unions made concessions and agreed to increased employee contribution rates:

“Ed Mendel, calpensions.com, 12-16-10

The state payment to CalPERS for this fiscal year was cut by $200 million yesterday, reflecting a savings for the deficit-ridden state from agreements by state workers to pay more toward their pensions.”

http://uclafacultyassociation.blogspot.com/2010/12/observations-and-worries-over-at.html

——————

How the large funds are funded:

“Three sources fund a defi ned benefi t retirement
plan: (1) Employee contributions, which, in
general, are based on a percentage of their
earnings. The percentage is fixed by statute and
varies from about 5 to 9 percent, depending on
the plan type and whether the employee is
covered by Social Security. (2) Earnings from
the investment of System assets in stocks,
bonds, real estate, and other investment
vehicles. The amount contributed from this
source fl uctuates from year to year. (3)
Employer contributions, which are determined
through an actuarial valuation process.”

https://www.calpers.ca.gov/mss-publication/pdf/xMH7ejd2n6SRJ_understanding-calpers-pub-36.pdf

(BTW, this is an excellent link for anyone who wants to get a better understanding of how public benefit/pension systems work.)

In summary, the benefits are guaranteed, but the contribution rates can change.

I believe we will see new formulas where, if people choose to keep their current benefits, their contribution rates will go up. Otherwise, they can choose less generous benefits and maintain the same contribution rate, and/or they might be given the option to opt-out of the defined benefit, and roll their assets into a defined contribution plan.

[CA renter]

I’m not a pension expert, but do know a bit about how some public pension plans work in California. I’m most familiar with the CalPERS and CalSTRS systems (the individual employers, like the City of San Diego, can have their own plans, and these can vary greatly from one employer to another). Here’s how the large pension systems work, in general, in California.

If an employer chooses not to have their own pension fund, they can contract with CalPERS or CalSTRS to administer their pension/benefit plans. The obligation, in this case, is between the employer and the pension fund. Employee contribution rates are set by law, which I believe currently caps them at 9%. Employer contribution rates are set periodically, based on actuarial calculations determined by CalPERS, and based on benefit options chosen by the employer.

The mix of employer and employee contributions are often negotiated when contracts are renewed, and employers can “pick up” (pay) a portion of the employee contribution, or they can increase the contribution rate that the employees pay. They can also increase the amount the employees pay, over and above what is “normal” (the fully funded rate) based on actuarial valuations, and can over-fund their pensions, based on my understanding.

The pension obligation lies between the pension fund (CalPERS) and the employees. The pension obligation is NOT from employer to employee, but from pension fund to employee. The obligation to the pension fund is from the employer to the pension fund, but the employer does not directly pay the employees’ retirement benefit — the pension fund is the one obligated there.

When you hear about the iron-clad, “guaranteed” pensions, you are hearing about the *benefits* that are guaranteed to the employees by the pension funds. These benefits cannot be taken away.

What is not set in stone is the contribution rate. This can change, and is often changed during contract negotiations. The cap on employee contribution rates can be changed by the state legislature.

An example (of MANY) where unions made concessions and agreed to increased employee contribution rates:

“Ed Mendel, calpensions.com, 12-16-10

The state payment to CalPERS for this fiscal year was cut by $200 million yesterday, reflecting a savings for the deficit-ridden state from agreements by state workers to pay more toward their pensions.”

http://uclafacultyassociation.blogspot.com/2010/12/observations-and-worries-over-at.html

——————

How the large funds are funded:

“Three sources fund a defi ned benefi t retirement
plan: (1) Employee contributions, which, in
general, are based on a percentage of their
earnings. The percentage is fixed by statute and
varies from about 5 to 9 percent, depending on
the plan type and whether the employee is
covered by Social Security. (2) Earnings from
the investment of System assets in stocks,
bonds, real estate, and other investment
vehicles. The amount contributed from this
source fl uctuates from year to year. (3)
Employer contributions, which are determined
through an actuarial valuation process.”

https://www.calpers.ca.gov/mss-publication/pdf/xMH7ejd2n6SRJ_understanding-calpers-pub-36.pdf

(BTW, this is an excellent link for anyone who wants to get a better understanding of how public benefit/pension systems work.)

In summary, the benefits are guaranteed, but the contribution rates can change.

I believe we will see new formulas where, if people choose to keep their current benefits, their contribution rates will go up. Otherwise, they can choose less generous benefits and maintain the same contribution rate, and/or they might be given the option to opt-out of the defined benefit, and roll their assets into a defined contribution plan.

[CA renter]

I’m not a pension expert, but do know a bit about how some public pension plans work in California. I’m most familiar with the CalPERS and CalSTRS systems (the individual employers, like the City of San Diego, can have their own plans, and these can vary greatly from one employer to another). Here’s how the large pension systems work, in general, in California.

If an employer chooses not to have their own pension fund, they can contract with CalPERS or CalSTRS to administer their pension/benefit plans. The obligation, in this case, is between the employer and the pension fund. Employee contribution rates are set by law, which I believe currently caps them at 9%. Employer contribution rates are set periodically, based on actuarial calculations determined by CalPERS, and based on benefit options chosen by the employer.

The mix of employer and employee contributions are often negotiated when contracts are renewed, and employers can “pick up” (pay) a portion of the employee contribution, or they can increase the contribution rate that the employees pay. They can also increase the amount the employees pay, over and above what is “normal” (the fully funded rate) based on actuarial valuations, and can over-fund their pensions, based on my understanding.

The pension obligation lies between the pension fund (CalPERS) and the employees. The pension obligation is NOT from employer to employee, but from pension fund to employee. The obligation to the pension fund is from the employer to the pension fund, but the employer does not directly pay the employees’ retirement benefit — the pension fund is the one obligated there.

When you hear about the iron-clad, “guaranteed” pensions, you are hearing about the *benefits* that are guaranteed to the employees by the pension funds. These benefits cannot be taken away.

What is not set in stone is the contribution rate. This can change, and is often changed during contract negotiations. The cap on employee contribution rates can be changed by the state legislature.

An example (of MANY) where unions made concessions and agreed to increased employee contribution rates:

“Ed Mendel, calpensions.com, 12-16-10

The state payment to CalPERS for this fiscal year was cut by $200 million yesterday, reflecting a savings for the deficit-ridden state from agreements by state workers to pay more toward their pensions.”

http://uclafacultyassociation.blogspot.com/2010/12/observations-and-worries-over-at.html

——————

How the large funds are funded:

“Three sources fund a defi ned benefi t retirement
plan: (1) Employee contributions, which, in
general, are based on a percentage of their
earnings. The percentage is fixed by statute and
varies from about 5 to 9 percent, depending on
the plan type and whether the employee is
covered by Social Security. (2) Earnings from
the investment of System assets in stocks,
bonds, real estate, and other investment
vehicles. The amount contributed from this
source fl uctuates from year to year. (3)
Employer contributions, which are determined
through an actuarial valuation process.”

https://www.calpers.ca.gov/mss-publication/pdf/xMH7ejd2n6SRJ_understanding-calpers-pub-36.pdf

(BTW, this is an excellent link for anyone who wants to get a better understanding of how public benefit/pension systems work.)

In summary, the benefits are guaranteed, but the contribution rates can change.

I believe we will see new formulas where, if people choose to keep their current benefits, their contribution rates will go up. Otherwise, they can choose less generous benefits and maintain the same contribution rate, and/or they might be given the option to opt-out of the defined benefit, and roll their assets into a defined contribution plan.

[CA renter]

I’m not a pension expert, but do know a bit about how some public pension plans work in California. I’m most familiar with the CalPERS and CalSTRS systems (the individual employers, like the City of San Diego, can have their own plans, and these can vary greatly from one employer to another). Here’s how the large pension systems work, in general, in California.

If an employer chooses not to have their own pension fund, they can contract with CalPERS or CalSTRS to administer their pension/benefit plans. The obligation, in this case, is between the employer and the pension fund. Employee contribution rates are set by law, which I believe currently caps them at 9%. Employer contribution rates are set periodically, based on actuarial calculations determined by CalPERS, and based on benefit options chosen by the employer.

The mix of employer and employee contributions are often negotiated when contracts are renewed, and employers can “pick up” (pay) a portion of the employee contribution, or they can increase the contribution rate that the employees pay. They can also increase the amount the employees pay, over and above what is “normal” (the fully funded rate) based on actuarial valuations, and can over-fund their pensions, based on my understanding.

The pension obligation lies between the pension fund (CalPERS) and the employees. The pension obligation is NOT from employer to employee, but from pension fund to employee. The obligation to the pension fund is from the employer to the pension fund, but the employer does not directly pay the employees’ retirement benefit — the pension fund is the one obligated there.

When you hear about the iron-clad, “guaranteed” pensions, you are hearing about the *benefits* that are guaranteed to the employees by the pension funds. These benefits cannot be taken away.

What is not set in stone is the contribution rate. This can change, and is often changed during contract negotiations. The cap on employee contribution rates can be changed by the state legislature.

An example (of MANY) where unions made concessions and agreed to increased employee contribution rates:

“Ed Mendel, calpensions.com, 12-16-10

The state payment to CalPERS for this fiscal year was cut by $200 million yesterday, reflecting a savings for the deficit-ridden state from agreements by state workers to pay more toward their pensions.”

http://uclafacultyassociation.blogspot.com/2010/12/observations-and-worries-over-at.html

——————

How the large funds are funded:

“Three sources fund a defi ned benefi t retirement
plan: (1) Employee contributions, which, in
general, are based on a percentage of their
earnings. The percentage is fixed by statute and
varies from about 5 to 9 percent, depending on
the plan type and whether the employee is
covered by Social Security. (2) Earnings from
the investment of System assets in stocks,
bonds, real estate, and other investment
vehicles. The amount contributed from this
source fl uctuates from year to year. (3)
Employer contributions, which are determined
through an actuarial valuation process.”

https://www.calpers.ca.gov/mss-publication/pdf/xMH7ejd2n6SRJ_understanding-calpers-pub-36.pdf

(BTW, this is an excellent link for anyone who wants to get a better understanding of how public benefit/pension systems work.)

In summary, the benefits are guaranteed, but the contribution rates can change.

I believe we will see new formulas where, if people choose to keep their current benefits, their contribution rates will go up. Otherwise, they can choose less generous benefits and maintain the same contribution rate, and/or they might be given the option to opt-out of the defined benefit, and roll their assets into a defined contribution plan.

[CA renter]

I’m not a pension expert, but do know a bit about how some public pension plans work in California. I’m most familiar with the CalPERS and CalSTRS systems (the individual employers, like the City of San Diego, can have their own plans, and these can vary greatly from one employer to another). Here’s how the large pension systems work, in general, in California.

If an employer chooses not to have their own pension fund, they can contract with CalPERS or CalSTRS to administer their pension/benefit plans. The obligation, in this case, is between the employer and the pension fund. Employee contribution rates are set by law, which I believe currently caps them at 9%. Employer contribution rates are set periodically, based on actuarial calculations determined by CalPERS, and based on benefit options chosen by the employer.

The mix of employer and employee contributions are often negotiated when contracts are renewed, and employers can “pick up” (pay) a portion of the employee contribution, or they can increase the contribution rate that the employees pay. They can also increase the amount the employees pay, over and above what is “normal” (the fully funded rate) based on actuarial valuations, and can over-fund their pensions, based on my understanding.

The pension obligation lies between the pension fund (CalPERS) and the employees. The pension obligation is NOT from employer to employee, but from pension fund to employee. The obligation to the pension fund is from the employer to the pension fund, but the employer does not directly pay the employees’ retirement benefit — the pension fund is the one obligated there.

When you hear about the iron-clad, “guaranteed” pensions, you are hearing about the *benefits* that are guaranteed to the employees by the pension funds. These benefits cannot be taken away.

What is not set in stone is the contribution rate. This can change, and is often changed during contract negotiations. The cap on employee contribution rates can be changed by the state legislature.

An example (of MANY) where unions made concessions and agreed to increased employee contribution rates:

“Ed Mendel, calpensions.com, 12-16-10

The state payment to CalPERS for this fiscal year was cut by $200 million yesterday, reflecting a savings for the deficit-ridden state from agreements by state workers to pay more toward their pensions.”

http://uclafacultyassociation.blogspot.com/2010/12/observations-and-worries-over-at.html

——————

How the large funds are funded:

“Three sources fund a defi ned benefi t retirement
plan: (1) Employee contributions, which, in
general, are based on a percentage of their
earnings. The percentage is fixed by statute and
varies from about 5 to 9 percent, depending on
the plan type and whether the employee is
covered by Social Security. (2) Earnings from
the investment of System assets in stocks,
bonds, real estate, and other investment
vehicles. The amount contributed from this
source fl uctuates from year to year. (3)
Employer contributions, which are determined
through an actuarial valuation process.”

https://www.calpers.ca.gov/mss-publication/pdf/xMH7ejd2n6SRJ_understanding-calpers-pub-36.pdf

(BTW, this is an excellent link for anyone who wants to get a better understanding of how public benefit/pension systems work.)

In summary, the benefits are guaranteed, but the contribution rates can change.

I believe we will see new formulas where, if people choose to keep their current benefits, their contribution rates will go up. Otherwise, they can choose less generous benefits and maintain the same contribution rate, and/or they might be given the option to opt-out of the defined benefit, and roll their assets into a defined contribution plan.

[CA renter]

Some additional facts about CalPERS:

THE STATEMENT “PENSION COSTS WILL CRUSH GOVERNMENT” IS A GROSS EXAGGERATION
 CalPERS pension costs represented 1.8 percent of the State’s $87.2 billion general
fund budget in FY 2009-10. In comparison, the cost of debt service amounted to 5.3
percent of the general fund budget in the same year
 For every pension dollar paid over the last 20 years, 64 cents comes from
investments, 21 cents from employers, and 15 cents from members.
REPORT IGNORES THAT PENSION REFORM IS ALREADY HAPPENING AND FAILS TO ACCOUNT FOR
COST SAVINGS
 State employees are paying 2-5 percent more under new bargained agreements,
saving the general fund $300 million annually.
 Significant rollback of pension formulas for all new State hires and pensions are now
being calculated using three-year final average compensation.

FACT SHEET: KEY OBSERVATIONS OF LITTLE HOOVER COMMISSION REPORT
Page 2 of 2
 More than 150 cities, counties and districts have reduced pensions for new hires,
increased member contributions, or are in the process of doing one or both.
 Some 300 valuation estimates for reducing pensions for local governments have been
processed.

http://www.calpersresponds.com/downloads/key-observations-lh-report.pdf

[CA renter]

Some additional facts about CalPERS:

THE STATEMENT “PENSION COSTS WILL CRUSH GOVERNMENT” IS A GROSS EXAGGERATION
 CalPERS pension costs represented 1.8 percent of the State’s $87.2 billion general
fund budget in FY 2009-10. In comparison, the cost of debt service amounted to 5.3
percent of the general fund budget in the same year
 For every pension dollar paid over the last 20 years, 64 cents comes from
investments, 21 cents from employers, and 15 cents from members.
REPORT IGNORES THAT PENSION REFORM IS ALREADY HAPPENING AND FAILS TO ACCOUNT FOR
COST SAVINGS
 State employees are paying 2-5 percent more under new bargained agreements,
saving the general fund $300 million annually.
 Significant rollback of pension formulas for all new State hires and pensions are now
being calculated using three-year final average compensation.

FACT SHEET: KEY OBSERVATIONS OF LITTLE HOOVER COMMISSION REPORT
Page 2 of 2
 More than 150 cities, counties and districts have reduced pensions for new hires,
increased member contributions, or are in the process of doing one or both.
 Some 300 valuation estimates for reducing pensions for local governments have been
processed.

http://www.calpersresponds.com/downloads/key-observations-lh-report.pdf

[CA renter]

Some additional facts about CalPERS:

THE STATEMENT “PENSION COSTS WILL CRUSH GOVERNMENT” IS A GROSS EXAGGERATION
 CalPERS pension costs represented 1.8 percent of the State’s $87.2 billion general
fund budget in FY 2009-10. In comparison, the cost of debt service amounted to 5.3
percent of the general fund budget in the same year
 For every pension dollar paid over the last 20 years, 64 cents comes from
investments, 21 cents from employers, and 15 cents from members.
REPORT IGNORES THAT PENSION REFORM IS ALREADY HAPPENING AND FAILS TO ACCOUNT FOR
COST SAVINGS
 State employees are paying 2-5 percent more under new bargained agreements,
saving the general fund $300 million annually.
 Significant rollback of pension formulas for all new State hires and pensions are now
being calculated using three-year final average compensation.

FACT SHEET: KEY OBSERVATIONS OF LITTLE HOOVER COMMISSION REPORT
Page 2 of 2
 More than 150 cities, counties and districts have reduced pensions for new hires,
increased member contributions, or are in the process of doing one or both.
 Some 300 valuation estimates for reducing pensions for local governments have been
processed.

http://www.calpersresponds.com/downloads/key-observations-lh-report.pdf

[CA renter]

Some additional facts about CalPERS:

THE STATEMENT “PENSION COSTS WILL CRUSH GOVERNMENT” IS A GROSS EXAGGERATION
 CalPERS pension costs represented 1.8 percent of the State’s $87.2 billion general
fund budget in FY 2009-10. In comparison, the cost of debt service amounted to 5.3
percent of the general fund budget in the same year
 For every pension dollar paid over the last 20 years, 64 cents comes from
investments, 21 cents from employers, and 15 cents from members.
REPORT IGNORES THAT PENSION REFORM IS ALREADY HAPPENING AND FAILS TO ACCOUNT FOR
COST SAVINGS
 State employees are paying 2-5 percent more under new bargained agreements,
saving the general fund $300 million annually.
 Significant rollback of pension formulas for all new State hires and pensions are now
being calculated using three-year final average compensation.

FACT SHEET: KEY OBSERVATIONS OF LITTLE HOOVER COMMISSION REPORT
Page 2 of 2
 More than 150 cities, counties and districts have reduced pensions for new hires,
increased member contributions, or are in the process of doing one or both.
 Some 300 valuation estimates for reducing pensions for local governments have been
processed.

http://www.calpersresponds.com/downloads/key-observations-lh-report.pdf

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