Daniel Borenstein

Daniel Borenstein, staff columnist
Posted: 01/17/2014 01:43:25 PM PST
Updated: 01/17/2014 02:51:52 PM PST

State and local governments face more pension rate increases as the nation’s largest retirement fund continues to fix its flawed accounting, this time by acknowledging that future generations will live longer.

Given constant advancements in medical science, that might seem obvious. But the California Public Employees’ Retirement System hasn’t previously factored future mortality improvements into actuarial calculations. As a result, it has not collected enough money to pay pensions when workers retire.

The fix, which the CalPERS board will consider in February, would further drive up rates for public agencies, which already face recent changes to correct for the system’s unrealistic investment return assumptions and a dangerously slow paydown of debt.

Chief Actuary Alan Milligan’s mortality change recommendation will probably trigger calls for delay from some labor leaders and local government officials. But postponement would continue the pension system underfunding and push more costs onto future generations.

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