By Jon Ortiz
jortiz@sacbee.com
Published: Monday, Sep. 9, 2013 – 12:00 am | Page 1A
Last Modified: Monday, Sep. 9, 2013 – 6:31 am

The average retirement payout for new retirees in California’s biggest public pension system doubled between 1999 and 2012, according to CalPERS data, and initial monthly payments for one group nearly tripled in that period.

State and local cops and firefighters benefited the most.

In the 14 years covered by the data analyzed by The Sacramento Bee, average first-month pensions to state police and firefighters went from $1,770 to $4,978. California Highway Patrol officers’ first-month retirement payments doubled from $3,633 to $7,418, and local government safety employees’ pensions went from $3,296 to $6,867.

The figures from CalPERS’ internal annual reports, obtained by The Bee through a Public Records Act request, show how upgraded pension formulas that became fashionable during the late 1990s and early 2000s amplified the impact of pay raises to boost retirement allowances.

The findings also illustrate the slow-motion impact of pension changes, whether enhancements approved years ago or rollbacks launched this year.

“These numbers indicate the cost of benefits given away a decade ago are finally coming home to roost,” said Dan Pellissier, a pension-reform advocate who tried and failed to put a measure before voters last year to roll back pensions. “We’re finally having to pay the pension piper.”

Just as higher pensions established years ago are still rolling through the system, significant savings from changes that took effect this year – including caps on benefits for new hires and higher employee contributions – won’t significantly stem retirement allowances and their cost to taxpayers for many years.

During recent heated debates over public pensions, unions and other defenders of the status quo have cited the average CalPERS pension payment for all retirees, now $2,629 per month, as proof that benefits were modest.

But Pellissier and others in the pension-reform camp said that figure was misleading because it included retirees who took their pensions before 1999’s Senate Bill 400, which allowed employers to retroactively increase pension formulas for employees.

According to the reports obtained by The Bee, the average first-month pension allowance for all newly retired pensioners last year was $3,025, up nearly 100 percent from 1999.

CalPERS Deputy Chief Actuary David Lamoureux attributed the increase largely to higher salaries. He noted that initial payments are determined by three factors: an employee’s retirement age, service time and pay. The largest group of state workers is under a “2 at 55” formula. Under that plan, for example, a person earning $5,000 per month when he or she retires at age 55 after 20 years of service receives a $2,000 monthly pension – 2 percent of salary multiplied by 20 years of service.

If the same job pays $100 more in five years to another exiting employee with the same age and years of service, the second employee’s pension would be $2,040 per month.

Salary growth explains “at least 50 percent” of the increase in initial pension payments, Lamoureux said, “and maybe closer to 70 or 75 percent.”

Enhanced formulas introduced in 1999 and later “could easily account for another 20 percent of the (pension) increases,” Lamoureux said.

Some government retirees have gained relatively little over the years.

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