On politics in the Golden State
February 15, 2012 | 12:51 pm
CalPERS has a new report that says California Gov. Jerry Brown’s idea to alter pensions with 401(k)-style plans won’t help new workers and won’t save California money, either.
The California Public Employees Retirement System is the nation’s largest public pension fund, and its new report undermines Brown’s efforts to change California’s pension system — which the governor insists is unaffordable and unsustainable.
CalPERS found that while some schools and local government agencies will probably save money, the expected savings to the state are “generally not significant.”
Central to the debate is the fact that current workers’ contributions help pay retirees’ benefits. If new hires begin paying into 401(k)-style plans, that reduces the overall contribution pool and taxpayers will be on the hook for the difference.
The CalPERS report was requested by the Legislature, which is considering Brown’s proposal. Legislative leaders have said they are committed to changing the system, but that commitment will be tested in the coming weeks and months as their political allies in organized labor ratchet up opposition to the governor’s plan.
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