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Will The Approved Pension Reform Bill Really Help Us?

Before adjourning, state lawmakers passed a bill late Friday that could cut pension costs by billions of dollars. Critics say the bill has loopholes that may make things even worse.

 

On Friday, California state legislators passed a reform measure that is expected to put new limits on pensions for future state and local government employees, saving billions of dollars in retirement spending.

The bill, AB340, passed 49-8 in the Assembly and 38-1 in the state Senate.

Brought forward by Governor Jerry Brown on Tuesday, the new law - if signed by Brown - could cut $40 billion to $60 billion in pension expenses for government employers over the next 30 years, according to the California Public Employees' Retirement System (CalPERS), the largest public pension fund in the United States.

According to the Huffington Post, the legislation will increase the retirement age for new employees, cap the annual payout at $132,120, eliminate numerous abuses of the system and require workers who are not contributing half of their retirement costs to pay more.

State and local governments have been struggling to meet the demands of long-held pension promises to retirees while their abilities to pay shrink.

Public employee unions are unhappy about the agreement, and complained that Democrats who normally support their causes in Sacramento had abandoned them.

Others felt the legislation did not go far enough.

"I hope people acknowledge there is much, much more work to be done," said Joe Nation, a former Democratic member of the state Assembly who now teaches public policy at Stanford University in an interview with Reuters. "It's better than moving backwards but this barely moves the ball forward."

Nation in recent years has overseen studies warning California and its local governments face unfunded pension liabilities that stretch into the hundreds of billions of dollars.

Pension costs contributed to the bankruptcy filings of Stockton and San Bernardino this year.

"Because we are so under water right now there just really has to be more," Nation told Reuters.

What do you think? Will this reform measure being sent to Governor Brown help the economies of our state and our cities? Should there be a cap on the amount a person can earn from a pension?

Let us know in your comments. 

Jennifer Squires September 13, 2012 at 05:14 PM
Wonder what retirees are really making? Here's some insight into what Watsonville-area retirees gross each month. http://watsonville.patch.com/articles/watsonville-pensions-what-retirees-are-receiving
David H. Perez September 13, 2012 at 07:27 PM
Jennifer - To debunk alot of the information that is flying around out there, I will use myself as an example. I retired last year from working for another county in the law enforcement/criminal justice field for nearly 30 years. By the end of my career, I had earned a pretty high ranking. My retirement income does not come close to six figures. Are there some abuses out there? Sure, but the abusers are an extremely small percentage of public employees.
Allen King September 14, 2012 at 02:25 AM
No I don't hate public employees. The provide essential services and I respect their work. What I hate are the unions who just won't understand the figures. There is no money left, where is the money to pay for all these insane benefits (example: unlimited sick day accruals and payouts - name one private employer in the world that does this). When times were good, they got good raises. Public employee salaries, benefits and pension all put together have gone up 60-70% in the last 10 years. In the same period of time, average income of middle class has gone down 10%. So instead of giving concession during these bad economic years, unions wants to middle class to pay more taxes so that they don't have to give any concessions. That is why majority of people, who are struggling to make ends meet, are opposed to unions. Let's see how long this gravy train lasts. Again, no money left to pay for these unsustainable perks and pension. Just look at the list Jennifer has posted. 836 people in a small town are getting six figure pensions.
Allen King September 14, 2012 at 02:30 AM
@Perez, I talk data you fools talk "hope your house get burned and no firefigher comes to rescure." This shows how mentally bankrupt and incompetent you are. You are a fool because you don't understand a simple fact that if nothing is done now, you might loose those funny dollars you are getting as pension. When your city files bankruptcy you will be getting peanuts. You fools never answer a simple question, where is the money to pay for all these? Can't you see that you are at risk of losing your pension if this system is not fixed?
Beth Dewey September 14, 2012 at 07:04 PM
Mr. King, you act like the unions are in total control and that is not the case. I think the unions are very well aware of the issues and you many not be aware of all of the issues the unions may have since you are not in the union. Management is the other half of the equation and there are probably more responsible for the situation. They are supposed to be experts on compensation and schooled in resources to do the math. Statistics don't tell the whole story and resorting to name-calling does not change anything that unions or the government management do. Many unions getting along very well with their unions. It all depends upon the competence of the individuals doing the negotiating.

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