The British call it “pension apartheid,” the enormous gap between the retirement benefits bestowed on public employees and workers in the private sector where defined benefit plans have all but disappeared.
In Los Angeles and throughout California, the reference to segregation hardly goes far enough to describe what amounts to wage slavery for the masses in support of luxurious lives in retirement for many local and state government employees who are paid more than those in private employment for comparable work and have to gamble their life savings in 401k plans at the mercy of Wall Street and the bankers.
Public employee pension funds gamble, too, but when they lose 25 to 30 percent of their assets, not to worry — taxpayers have to make good on their losses.
Retire at 55 versus 67 for Social Security, Cadillac health plans versus Medicare, 75 to 90 percent of highest salary versus nothing, zilch, zero for the vast majority of private sector workers.
As we start this election year, everybody has a plan to deal with the issue — not solve it but get it off the top agenda of issues that are reducing our services, deferring maintenance, increasing fees and charges for nearly everything government provides and leading to smoke-and-mirror budget tricks that will burden our lives and our children’s lives for decades to come.
More than 12,000 retired government employees
now draw six-figure pensions from CalPERS along and thousands more from the three L.A. pension funds, the teachers, UC and other separate funds — numbers that are soaring as senior highly-paid staff head to exits.
The cost to taxpayers is staggering and getting bigger every year, which is why felons are being dumped on our streets, classrooms are overcrowded, parks are closing, library hours cut and the rich and powerful have joined Gov. Jerry Brown or offered parallel schemes for tepid pension reforms tied to substantial tax increases.
Two weeks ago, the state Legislative Analyst’s Office issued a report
on two ballot measures being circulated by reformers like the governor’s plan would actually add billions every year to taxpayer pensions costs for 20 to 30 years before they start paying dividends.
The reason is that new public employees would either get a 401k without a guaranteed pension or a hybrid of a 401k and guaranteed defined benefit pension so they would be contributing nothing or far less to pay for the pensions of those who are retired or retire in coming years because all these pension funds are run a credit card with only current bills being paid off.
This unfunded liability and the soaring burden of pensions and health care costs of public employees didn’t just happen. It was put in the spotlight by the economic downturn but it wasn’t caused by that.
“You can see the contributions dropped next to nothing. At that time, the state and many local governments increased benefits, and shortly thereafter the investment marks took a downward dive, and then later in the decade in 2008, another downward dive again. And these factors have contributed to the large increase you see in state Pension Contributions thereafter.”
Need I mention that Antonio Villaraigosa was the Speaker of the Assembly at the time cops and firefighters got a jump in their annual accrual from 2 to 3 percent and were granted pensions 90 percent of salary with all other public employees getting big increases as well.
That is the same Antonio Villaraigosa who as mayor foisted on the public a pension reform plan last spring that brought in higher contributions from workers in the short-term in exchange for hard guarantees of pension and health care protection that will bleed the city treasure dry for decades.
That was last March just one month after the Little Hoover Commission
, the watchdog on state government, issued a report proposing a cap in the $80,000 – $90,000 range of the
maximum salary that could be used to calculate pension benefits, a higher retirement age to discourage early retirement, requiring workers and government agencies to share funding costs, steps to prevent spiking in the year before retirement, banning retroactive pension increases, ending government contribution “holidays,” and, of course, accountability and transparency that have long been missing.
“One need look no further than the actions of
some 200 public agencies in the months since the steep decline in the stock
market and housing values in 2008: Rather than foreswear risky behaviors, these
public agencies in California instead have improved pension benefits for their
employees. Up and down the state, cities, counties, and fire and water districts rewarded
employees with “golden
handshake” agreements that provide extra service credit to retire early;
introduced favorable methods to calculate pension benefits based on the single highest year of compensation; and lowered retirement ages that extend the government’s obligation to pay lifetime
retirement benefits. These actions further burden pension plans that already are
“The ability and willingness of leaders to contain growing pension
concern not only taxpayers who are seeing vital services and
programs cut to balance budgets, but the public employees who have the most to lose. A
pension is worthless without a job to back it.
“The Legislature has the tools to put state
and local public employee
pensions back on a path that can restore stability and public confidence to state and local pension
systems. Marginal changes, however, will fall short of the need for serious action. Adding a “second tier” of lower pension benefits for new hires, for example, will not deliver savings for a generation, while pension costs are swelling now as Baby Boomers retire.“
It is not anti-union or anti-public employee or even anti-tax to demand that the people we elect to high office do their jobs for the benefit of society as a whole.
We have the chance in this election year to hold those seeking public office accountable for their past actions and to demand a commitment to genuine reform.
The power is ours to exercise and if we keep on electing the people responsible for this and so many other messes, we have no one to blame but ourselves.