Pensions

By Ed Mendel
May 23, 2016

Annual rates paid by employers to CalPERS and CalSTRS are going up, pension funding levels haven’t recovered from a big drop during the recession, and Gov. Brown’s pension reform put a lid on pension increases.

But there is still pressure for one type of retirement benefit increase: a lump-sum payment from pension funds received by survivors for funeral expenses when members die, often in addition to monthly payments for the spouse and dependents.

It’s usually called, ironically enough, the “death benefit.”

Last week, the CalPERS board took a neutral unless amended position on what has become perennial legislation to increase the death benefit from $2,000 to a minimum of $5,000 for its largest group of members, non-teaching school employees.

Last month, the CalSTRS board, after an initial look in September, once again put on hold a long-delayed increase in a $6,163 retiree death benefit for teachers. Since the board last increased the payment in 2002, inflation has increased 38 percent.

Part of the argument for the CalPERS non-teaching increase, in addition to the rising cost of funerals, is equity with other public pension members, which critics say has been used in the past to “ratchet up” retirement benefits.

Ivan Carillo of the California Federation of Teachers, the sponsor of the legislation (AB 1878), told the CalPERS board last week that since the death benefit was increased to $2,000 in 2000, the cost of the average funeral is up 40 percent to $10,000.

He said there have been too many “heartbreaking stories” of the lowest-paid school staff, the non-teaching “classified” employees, seeking money for funerals from friends, churches, and high-interest loans, some even losing their houses to cover costs.

The importance to the non-teaching school employees of an increase in the death benefit is the reason the legislation has been repeatedly introduced, he said, a half dozen times since 2009.

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