By Daniel Borenstein | Brace yourself taxpayers: CalPERS is about to bury you deeper in debt.
The nation’s largest pension system is expected to adopt a funding plan this week that anticipates shortfalls during the next decade and then banks on exceptional investment returns over the following half century to make up the difference.
It’s an absurd strategy designed to placate labor unions, who want more public money available now for raises, and local government officials who are struggling to make annual installment payments on past debt CalPERS has rung up.
And it highlights why the California Supreme Court, which is currently considering a key case on pension rights, and state lawmakers must do more to rein in public employee retirement costs. We can’t afford the current system.
That doesn’t mean that traditional pensions should be eliminated; it means future benefit accruals should be reduced to affordable levels that don’t continue saddling current and future generations with debt.
The California Public Employees’ Retirement System currently has a $153 billion unfunded liability, with only 68 percent of the assets it should have, largely because of similar, past hubris about investment returns.
The action this week will affect pensions for state workers, and hence all California taxpayers.
To read the entire column in the San Jose Mercury News, please click here.