Coming our way

What happens when public officials buy current labor peace by promising things that someone else is supposed to deliver down the road? Nothing good.

California pension payouts have doubled in 14 years 

The average retirement payout for new retirees in California’s biggest public pension system doubled between 1999 and 2012, according to CalPERS data, and initial monthly payments for one group nearly tripled in that period.

State and local cops and firefighters benefited the most.

In the 14 years covered by the data analyzed by The Sacramento Bee, average first-month pensions to state police and firefighters went from $1,770 to $4,978. California Highway Patrol officers’ first-month retirement payments doubled from $3,633 to $7,418, and local government safety employees’ pensions went from $3,296 to $6,867.

The figures from CalPERS’ internal annual reports, obtained by The Bee through a Public Records Act request, show how upgraded pension formulas that became fashionable during the late 1990s and early 2000s amplified the impact of pay raises to boost retirement allowances.

The findings also illustrate the slow-motion impact of pension changes, whether enhancements approved years ago or rollbacks launched this year.

“These numbers indicate the cost of benefits given away a decade ago are finally coming home to roost,” said Dan Pellissier, a pension-reform advocate who tried and failed to put a measure before voters last year to roll back pensions. “We’re finally having to pay the pension piper.”

 

10 Comments

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10 responses to “Coming our way

  1. Anonymous

    Wait a minute, FF claims its a Greenwich only issue of poor fund mismanagement????

    Do you suppose that it could really be, too expensive of a payout given longer lifespans, richer final year payouts, double dipping, and all the other tricks up the unions’ sleeves? Nah, couldn’t be.

  2. Anonymous

    Report out last week ranking Ct. as the second most underfunded pension system. If you closed down the entire State government for almost 3 years and used all revenue to cover the unfunded pension it would be just about whole. Of course that doesn’t take into account that the pension problem grows every year.
    Our State Treasurer, says things are great because of the low cost of borrowing. First rates are starting to take off and one day soon Ct. will have to pay a big premium to borrow, because of our worsening State finances.

  3. Anonymous

    America’s pension crisis may be much worse than we thought. A new report from State Budget Solutions looks at each state’s pension liabilities using a lower estimate of the rate of return than the states use themselves, and found that the country’s plans are underfunded by $4.1 trillion, and only 39 percent funded overall. The state-by-state breakdown looks even worse, with Illinois, Connecticut, Kentucky and Kansas holding plans that are less than 30 percent funded, ….

    http://blogs.the-american-interest.com/wrm/2013/09/07/the-pension-crisis-is-worse-than-we-thought/

  4. Anonymous

    And, here’s our home town boy, FF, helping Malloy resolve our fiscal situation in CT by pushing gambling to the poor and stupid:

    http://www.ctmirror.org/story/2013/09/10/so-reporter-and-ct-lottery-chairman-walk-bar-0

  5. Publius

    The payouts are just one side of the ledger. The other side is the way that municipalities are allowed to discount their future pension liabilities by their assumed rate of return on their investments. A few years back the GASB (Government Accounting Standards Board) undertook a review of municipal pension reporting and recommended changes. The one important issue that the buckled on was the use of assumed portfolio returns to discount liabilities versus using a more conservative long term interest rate benchmark to discount liabilities. In private sector pension plans, the discounting rate is a long term corporate bond rate (effectively and index yield) that more accurately reflects the discount rate on future liabilities.

    Most municipalities are using assumed portfolio returns of 7.5%-8.5% to discount liabilities even though their actual returns since the tech bubble burst in 2000 and the financial meltdown of 2008-2009 have been significantly lower. What this mean is that when the technocrat in charge of these pension funds tells the sheeple that the pensions are “well funded” (80% funded is minimum to be considered adequate) they are full of it. Add to the fact that many of these pension overseers are pursuing politically correct investing at the expense of maximizing returns and you have a recipe for disaster.

    Rhode Island has already given a buzz cut to municipal pensions because they had no choice as in no money. Ironically this was done by the liberals because when there is no money, even liberals will eat their young. Next up on the docket is Detroit, now in bankruptcy. It will be interesting to see what comes out of that because the unfunded portion these pension funds are considered general obligations and the Emergency manager for Detroit was offering creditors 10 cents on the dollar. After Detroit, you have Chicago Teacher’s pension and then the State of Illinois. CT is no far behind.

    Best read on this topic is Robert Novy-Marx and Joshua Rauh. A link to one of their papers.

    Click to access Public_Pension_Promises.pdf

    http://www.nber.org/digest/nov08/w14343.html
    http://www.aeaweb.org/articles.php?doi=10.1257/jep.23.4.191

    • For several years now Ive had a link up on the right side of this blog to Pension Tsunami, another blog that focuses on California’s pension mess but as the same blight has surfaced across the country, the author has expanded his scope. It’s pretty depressing reading.

  6. burningmadolf

    The goal is to absolute devastate the system so that the rest of the country can bail out the states in the worst condition (not possible but…). Un-funded healthcare obligations are even worse (on a percentage basis) CT’s healthcare obligations were completely UNFUNDED a couple of years ago to the tune of $25 billion or more and I doubt Hartford can ever solve that problem. But hey, how many minorities in the school system is way more important.

    • Cos Cobber

      Absolutely right, the plan is to wait for the great state pension bailout – coming to a blue state near you sometime in the 2020s.

  7. Anonymous Citizenette

    Well, that clinches it. I’m heading out west to snare me one of them rich retired cop or fireman types. California, here I come!