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Forum Post: California Governor Brown’s pension reform: An assault on state workers

Posted 6 years ago on March 6, 2012, 2:58 p.m. EST by GirlFriday (17435)
This content is user submitted and not an official statement

The 12 point plan attacks pension rights that were won through hard-fought struggles and which are guaranteed in the California Constitution. In a clear sign of the bi-partisan character of Brown’s anti-worker policies, his proposal has the full support of Republican legislators and corporate leaders.

Under Brown’s proposal, public employees will not be able to retire until their 67th birthday—up from the current retirement age of 55. In order to collect a full pension, workers hired in their 20s would need to work more than 40 years. This includes blue-collar workers, such as park employees and maintenance workers, whose daily duties impose a hard physical toll.

Under the Brown plan, traditional pensions based on years on the job and that pay a set percentage of a worker’s salary—known as “defined benefit” pensions—would be replaced by “hybrid” pensions that combine workers’ so-called cash balance of their defined benefit pensions with partial investment into a 401K plan, (with no guarantee of what the retirement benefit will be) and with Social Security.

Ostensibly, each of these three separate plans would contribute 25 percent of the workers last salary, toward his or her pension. What workers can really expect is a probability distribution: i.e., a gamble. For workers to do well in this scheme, they would have to retire when the stock market is up; they would need to contribute substantial savings to their 401K plan; and they would need to have a good Social Security pension. Many jobs, such as teachers, transit workers and county employees, are not included in the Social Security system. A worker would have to accumulate Social Security coverage working at least 10 years in another job.

This combination is highly regressive in its impact. While all pensions will be slashed, low-wage and part-time workers will be most severely affected. They are less able to make enough contributions to cash balance pensions to make up for the slashing of their defined benefits retirement. Those lower paid workers that also are engaged in physical labor, will suffer a double blow http://www.wsws.org/articles/2012/mar2012/calp-m06.shtml



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[-] 1 points by HitGirl (2263) 6 years ago

I don't know about Jerry Brown. Sometimes he has very good ideas but other times he just seems like a typical tool. Yes, the state needs money. No, we shouldn't loot it from the pensions of state workers.

[-] 1 points by GirlFriday (17435) 6 years ago

Yeah, I'm leaning towards tool.

[-] 0 points by Newspeak1 (39) from Mt Shasta, CA 6 years ago

Even in a liberal run state like this they fuck with the workers.


[-] 0 points by foolend (12) 6 years ago

The sad part is that States are going belly up and some of the reason is because of the public unions.

[-] 1 points by GirlFriday (17435) 6 years ago

As the fiscal crisis deepens in California and throughout the nation, teachers and other public employees have increasingly been scapegoated as a large part of the problem — specifically because they have earned pensions as part of their compensation package. It’s time to set the record straight.

The economic collapse is the result of many factors, including the subprime mortgage crisis, Wall Street banking scandals, the deregulation of financial institutions, high corporate and consumer debt levels, a high unemployment level, and unbridled corporate greed. It is an epic global crisis, and it affects all of us. It was not caused by middle-income teachers and education support professionals who worked hard and contributed part of their pay toward their pension throughout the years so they could live modestly during their retirement. It was caused largely by Wall Street bankers, who, instead of going to prison, continue to receive outrageous pay raises and $100 million bonuses.

In California, most educators belong to the California State Teachers’ Retirement System (CalSTRS), the second-largest public retirement fund in the country. The retirement fund is not a taxpayer giveaway, as critics have charged. Over the span of their careers, CalSTRS members contribute 8 percent of their monthly pay to help finance their retirement. Employers kick in an equal 8.25 percent of monthly pay, the state contributes a little more than 2 percent (which previously was 4.7 percent but was reduced a decade ago, saving the state over $3 billion), and the returns garnered by CalSTRS investments do the rest.

Unlike most workers, educators in California do not earn any Social Security benefits, and teachers who previously worked in the private sector often see their Social Security benefits reduced or eliminated from federal Social Security offsets, despite the fact that they paid into the Social Security system.

Teachers’ retirement benefits, secured over nearly three decades of service, replace about 62 percent of their working income. As such, the CalSTRS pension represents the only source of reliable monthly income a retired teacher receives. In addition, most public school educators in the state retire without employer-sponsored health care after age 65.

Teachers are not the only ones to gain from having a secure retirement. California gains as well. Here’s why:

Retiree spending from CalSTRS and CalPERS, the California Public Employee’s Retirement System, benefits create more than $34.5 billion in economic output for the state each year. As recently as 2007, almost 61,000 jobs were created due to the economic activity of retirement benefit plans. Each $1 in taxpayer contributions to California’s state and local pension plans creates $7.91 in total economic output for the state. Defined benefit payments to retired educators have been a powerful economic engine in California’s 58 counties and have a trickle-down effect on the local, state and national economies as well.

Without question, CalSTRS, like pension funds worldwide, has taken a hit due to the global recession, but it is not bankrupt, nor will it bankrupt the state. CalSTRS has historically been a sound system, and until the market collapse had consistently met or exceeded its assumed rate of return. Even under current economic conditions, CalSTRS is 71 percent funded and has sufficient assets and projected contributions to pay benefits until 2044.

Why the attack on public employee pensions? Who really benefits by their elimination? Again, the answer is Wall Street and those who seek to undermine the middle class. The elimination of public pension systems would be a huge boon for financial planners and companies that stand to invest that money while making profit off of the fees they can charge each individual. But Wall Street will also gain in an even bigger way. Institutional investors, like CalSTRS, have been the biggest champions of executive compensation reform and regulatory reform of the financial industry. Without institutional investors, no one would be keeping watch over bad corporate behavior, and there would be no guarantee that the money would go back into the state and national economies as it does now.

Some critics claim that CalSTRS is heading toward insolvency, and therefore should be eliminated. Although it is true that CalSTRS has a $56 billion shortfall, this does not have to be paid overnight. Like a mortgage, this is an amount that will need to be closed over a 30-year period. The shortfall has to be addressed, and teachers are committed to partnering with CalSTRS in finding a long-term funding solution, as they have since the system’s inception in 1913.

All Californians should have a safe and secure retirement system, just like teachers and other public servants. The real problem is not that teachers, firefighters and other public servants have defined benefit plans, but that many private-sector workers do not. That’s because the private sector systemically eliminated defined benefit pension plans in favor of risky 401(k) plans to reduce costs to corporate America at the expense of the American worker.

Instead of attacking teachers over their modest retirement benefits, we should be having discussions about how to create better retirement options for everyone. Eliminating the retirement options for teachers and public employees will not add to anyone’s retirement security and will not balance the state budget. http://www.cta.org/Issues-and-Action/Retirement/Where-We-Stand-Pensions.aspx

[+] -4 points by DKAtoday (33491) from Coon Rapids, MN 6 years ago

OMG - Tell it like it is. You go Girl!

I am so fucking sick and tired of good people being made into scapegoats for the greedy corrupt. DAMN!!!!!!!!!!!!!

This is why we are here folks and we are making a difference.

[-] 2 points by GirlFriday (17435) 6 years ago

Every time someone attacks the pensions, just like Social Security, you can bet it's because they want to get their little grubby paws on it.

[+] -5 points by DKAtoday (33491) from Coon Rapids, MN 6 years ago

This is so. Almost worked too, not so long ago. Just before the Big Meltdown. Would that not have been just lovely. Things are fucked-up now - but that would have just made it horrendous.

[-] 1 points by GirlFriday (17435) 6 years ago


[+] -5 points by DKAtoday (33491) from Coon Rapids, MN 6 years ago

It's summer time summer time sum sum summertime....summertime sumertime sum sum summertime.... summertiiiime............

[-] 0 points by XenuLives (1645) from Charlotte, NC 6 years ago

Thanks for posting this.

[-] 0 points by GirlFriday (17435) 6 years ago

Thank you for reading it.

[-] -1 points by beautifulworld (22863) 6 years ago

This issue of converting defined benefit plans to defined contribution plans is huge and the repercussions will be very negative.

And, deferring retirement age can have many adverse affects on society, one of which is fewer jobs for younger people.


[-] 0 points by GirlFriday (17435) 6 years ago

I agree. Every time I see that, I see the opportunity for the pensions to be stolen from again.

[+] -6 points by DKAtoday (33491) from Coon Rapids, MN 6 years ago

I've got to wonder how fully funded the plan is. That is the problem with many. They got set-up and started but the full payments never made it in or got borrowed and not payed back.

This is why you here complaints that they are not manageable.

[-] 1 points by GirlFriday (17435) 6 years ago

They hire "management" that loses x amount of money or borrow out of the fund and then turn around and screw over all of the employees. And then after demonizing them, turn around and hire someone else to steal all over again.

[+] -6 points by DKAtoday (33491) from Coon Rapids, MN 6 years ago

And try to hide the losses in a restructuring.

[-] 0 points by GirlFriday (17435) 6 years ago


[+] -6 points by DKAtoday (33491) from Coon Rapids, MN 6 years ago

Those Bastards!

[-] 1 points by GirlFriday (17435) 6 years ago

I agree.

[+] -6 points by DKAtoday (33491) from Coon Rapids, MN 6 years ago

Apparently so does your admirer. Well sort of. What can you expect.


[-] 1 points by GirlFriday (17435) 6 years ago

I know it does. It want's to play. I need a cup of coffee and then I will set about to kicking it.

[+] -6 points by DKAtoday (33491) from Coon Rapids, MN 6 years ago

LOL - Remember it needs exercise too. Be sure to toss a ball out into traffic.

[-] 0 points by HoarFriday (27) 6 years ago

And it shows you how stupid the masses are, they keep falling for the same tricks and never figure out that handling their own just makes good sense.

It's really hard to sympathize with stupid and irresponsible people, not that any predators are right and should go unpunished. Everyone should well know by now that it just doesn't work that way.