By TERI SFORZA
Published: Oct. 19, 2014 Updated: Oct. 20, 2014 10:37 a.m.
image0-Watchdog: Thousands join the ‘$100K club’ for pensions
Back in 2005, some 1,841 retirees pulled down more than $100,000 a year in pension checks from the California Public Employees’ Retirement System.
By 2009, this so-called “$100K club” had more than tripled, to 6,133 members.
And by the end of 2013, membership had nearly tripled again, to 16,838, according to data from CalPERS.
We’re talking growth in excess of 900 percent in just eight years, and no one expects the $100K club to stop growing any time soon.
This may give Joe Citizen an idea of why public pensions threaten to be an albatross around the necks of California governments (and, by extension, the necks of Joe Citizens themselves) – and why the question of whether public pension formulas are set in stone, or can be reduced, is so bitterly debated.
“The $100K club – it’s just not sustainable,” said San Jose Mayor Chuck Reed, a Democrat fighting to get a pension reform initiative on the 2016 ballot.
“On the public safety side, the average pension for people who have retired in the last four to five years is over $100,000. That’s not extraordinary – that’s average,” Reed said. “And in San Jose, they get a guaranteed 3 percent COLA (cost-of-living adjustment) every year no matter what, so many will make more in retirement than they did while they were working. You can’t sustain a 30-year retirement with 25 or 30 years of work.”
How did we get here? It’s a function of higher pay and more generous retirement formulas for those at the highest levels, especially city managers, police chiefs and fire chiefs, CalPERS says.
And while it’s true that the upper tiers of the $100K club are stocked with executive managers, the lower tiers are stocked with rank-and-file law-enforcement types, who enjoy the most generous benefits of all public employees (3 percent of salary for each year worked, starting at age 50).
So the $100K club is expanding, and will continue to expand, for many more years before it begins to contract, CalPERS said.
It’s a simple function of mathematics: Those who got $99,000 last year will get a 2 percent COLA this year, and, voila, find themselves in the club. So even if zero new retirees enter the system, the ranks of $100K-club pensioners will keep growing.
CalPERS points out that the $100K club has remained relatively stable at 2 to 3 percent of the total pool of retirees throughout the years. In 2013, we calculated it was 2.9 percent.
The most complete data set on public pension systems in the Golden State currently live at transparentcalifornia.com, a project of the reform-minded California Policy Project. One of its stunning findings: 2,335 CalPERS retirees took home pensions greater than 100 percent of their CalPERS-determined “final compensation” in 2013.
To read entire story, click here.