November 25, 2014

In his recent post on Pension Reform, Fox 11 News VP Kevin Hale fails to point out that local agencies are responsible for determining pay and benefits for public employees, not the CalPERS Board. CalPERS administers retirement plans and our job is to ensure the retirement benefits promised to local agency employees are properly funded.

Pension obligations are a shared responsibility between the employer and the employee. The majority of these obligations are paid with investment earnings - 67 cents of every dollar that is spent on public employee pensions is from these earnings, while 21 cents is from employers, and 12 cents is from employees.

As a result of pension reform, cities and local agencies have helped to manage their obligations including reducing benefits for new hires and increasing contributions from all public employees - some up to 15.25 percent of each monthly paycheck. More than 175 local governments already have decreased pensions for new hires.

In addition, Mr. Hale states that the CalPERS Board enacted 99 new ways to spike pensions which is absolutely false. In administering the pension program CalPERS is applying the provisions of The Public Employee Pension Reform Act (PEPRA) which outlines the handful of compensation items that should be excluded from new employees' pensions (e.g., bonuses, uniform allowances, car allowances, etc.). Beyond those exclusions explicitly mentioned in the statute, PEPRA did not clarify which other pay items to include or exclude from new employees' pensions - which is why reasonable people and pension systems can have various perspectives on how to interpret and implement the new pension reform law.

CalPERS is working with employers and stakeholders to review the list of compensation items to see if any of the items are no longer used or are obsolete and we are committed to working with our partners to develop long-term funding solutions to ensure a more cost-effective and sustainable pension system.

We urge Mr. Hale to do a little more research to present a more balanced perspective on this important issue.

View the report.