(Repeats with no change in text)
Oct 27 Pension reform has become a front-burner
issue in California's gubernatorial race between Democrat Jerry
Brown and Republican Meg Whitman. Reform measures are slated to
appear on ballots in several California cities.
Other states and large cities have seen their public
pension fund assets drop dramatically in the recession and
housing crisis and are scrambling to plug funding gaps.
Here are some key facts about public pension reform:
CALIFORNIA'S PENSION WOES:
* Three big California public pension funds, the California
Public Employees Retirement System (CalPERS), the California
State Teachers' Retirement System (CalSTRS) and the University
of California Retirement System (UCRS), face a collective
shortfall of more than $500 billion over the next 16 years,
well above the funds' own estimates of $55 billion, according
to an April study by the Stanford Institute for Economic Policy
* CalPERS, CALSTRS and UCRS combined administer the
pensions of about 2.6 million Californians.
CALIFORNIA'S PROPOSED REFORMS:
* Jerry Brown favors renegotiating current pension formulas
to require employees to contribute more toward their pensions
and to work to a later age for full retirement benefits.
* Meg Whitman favors adopting a 401k-style defined
contribution plan for new government hires and raising the
retirement age to 65 from 55 for most state employees outside
the public safety sector.
* Proposition B in San Francisco would increase employee
contributions to their pensions to 9 to 10 percent from 7.5
percent to save the city $120 million a year. It is opposed by
the city's unions but supported by some labor-friendly
politicians, including former Mayor Willie Brown.
* A San Jose ballot measure would remove language from that
city's charter that defines the rules for the age at which city
employees can retire and how much the city must pay into their
pension fund. It would apply to workers hired after 2011.
* Los Angeles Mayor Antonio Villaraigosa last week
announced what he called a "landmark proposal" to reform
pensions and retiree health benefits for newly hired police
officers and firefighters. The reform would require new workers
to contribute 11 percent toward their pensions, up from a
current 9 percent, and would pare back the size of pensions.
The measure is expected to save the city $173 million for every
1,000 new police officers and firefighters hired.
OTHER U.S. STATES:
* U.S. states face a total shortfall of at least $1
trillion in their funds for employees' pensions and retirement
benefits, according to a report released by the Pew Center on
the States in February. The report found that states did not
save for the future or manage costs well, but they also
typically expect an 8 percent return on investments.
* In August, Illinois said its public pension funds may
have to shed $960 million in assets to pay retirees because the
state has not come up with fiscal 2011 payments. In March,
Illinois passed a bill to reduce benefits for new hires and
raised the state retirement age, which it said would save $119
billion between now and 2045.
* Michigan in May passed a law requiring teachers to
contribute 3 percent of their salaries to a new retiree health
* The U.S. Securities and Exchange Commission in August
charged New Jersey with securities fraud for failing to
disclose to municipal bond investors that it was underfunding
its pensions. New Jersey agreed to settle the case without
admitting or denying the findings. It was not required to pay
any civil fines or penalties, but was ordered to cease and
desist from future violations.
(Reporting by Nichola Groom Los Angeles, editing by Mary
Milliken and Jim Marshall)