California cuts $170 million from pension costs
May 19, 2011
California is slated to save $170 million in pension fund payments mostly because new union contracts shift some of the costs to state worker. [MercuryNews]
New agreements with unions have boosted employee contributions by anywhere from two percent to five percent. The cost savings would have been larger if the California Public Employees’ Retirement System was not still recovering from investment losses from the recession.
The added employee contributions will trim the budget from $3.7 billion for the 2010-11 fiscal year to $3.5 billion for the 2011-12 fiscal year.
Nevertheless, it is still more than the state was paying before the market fell and the state began making up for the funds dwindling investment revenue.
Critics say the pension funds guarantee a level of benefits to public retirees that’s greater than what most non-government workers receive. In addition, they argue that the inadequately funded pensions leave taxpayers on the hook for shortfalls.
Brown has proposed some pension changes to prevent abuses and cut costs as he tries to close a $10.8 billion budget deficit, but Republican lawmakers are pushing for much more sweeping changes, such as freezing benefits and shifting to a hybrid retirement system that works more like a 401(k) investment account, the Mercury News added.