CalPERS pushed hikes now called "unsustainable"

I hadn't talked about pensions a whole lot lately, but I periodically check out the latest stores on www.calpensions.com which provides in-depth analysis of what is happening in the world of CalPERS. The caption above is the title of one of their most recent posts.

This post (click here) provides an excellent history of how our benefits have evolved over the past 25 years. In particular, it details the legislation that created the enhanced retirement packages that many member agencies (including Manteca) now receive.

It notes that:

A labor-friendly CalPERS board offered local governments an incentive eight years ago to boost public employee pension benefits, now called “unsustainable” by some.

CalPERS said it would reward higher benefits by inflating the value of the local government’s pension investment fund, making it easier to pay for more generous pensions.

Booming pension fund earnings in previous years were cited in a self-congratulatory board resolution approving the incentive in 2001. But the stock market boom had already cooled by then.
The CalPERS chief actuary, Ron Seeling, advised against the plan to inflate the market value of the assets, Tom Branan reported in the May/June 2001 issue of The Public Retirement Journal. (emphasis added)

Later in the article it notes:
CalPERS told the Legislature that the benefit increases in SB 400 could be paid for by “superior” investment earnings and the accounting change that boosted assets from 90 to 95 percent of market value.

Annual state contributions to CalPERS were expected to remain roughly unchanged for the next decade. But the CalPERS forecast was wrong, mainly because of a weak stock market not the cost of the increased benefits.

State payments to CalPERS, $157 million in 2000, soared to $2.5 billion by 2005 ($3.3 billion this year). Gov. Arnold Schwarzenegger briefly backed a plan to switch new state and local government hires to a 401(k)-style individual investment plan.

It also discusses the CalPERS' chief actuary's recent quote:

“I don’t want to sugarcoat anything,” Seeling said. “We are facing decades without significant turnarounds in assets, decades of — what I, my personal words, nobody else’s — unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan … unsustainable pension costs. We’ve got to find some other solutions.”