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| Stop the (BAD) Press Assembly Bill 1987 (Hernandez) We fixed this problem within the CalPERS system about 20 years ago. most all of it is related to the “1937 Act County retirement System and STRS. We fixed this problem within the CalPERS system However, at the time, these two systems said they would do the reforms themselves. They never did it, so now the legislature has to make them stop the abuses. the abuses. AB 1987 (Hernandez) has been introduced to deal with this pension spiking/reform. Another bill may be introduced in the Senate, containing the same language. Decisions are pending regarding the Senate strategy and author. There are about 66 completely different public retirement programs in California and not one is financially connected to the other. There is CalPERS that we are all in. Then the next largest is STRS for teachers only. Then there is what is known as “37 Act” made up of about 20 counties with completely different retirement plans with no financial connection to each other or us. These “37 Act” plans determine the retirement that county employees will receive at the time of retirement. You may have read of ways upper management have massaged their last final years to indicate that they should receive more retirement benefits that they earned. Because of the past action of a few the retirees those of us in CalPERS have been receiving bad press at no fault of our own. AB 1987 will handle the spiking problem and hopefully stop the bad press. It’s going to be very, very interesting to see who will oppose this bill. TALKING POINTS – ANTI-SPIKING LEGISLATION Retirement systems that provide retirement security for those who give their lives to public service have been tainted recently by a few individuals who have taken advantage of the system. Reforms are needed. Some public employees, most of them in management positions, have taken advantage of unfair and unjustified “spikes” to their paycheck, at the end of their career, to create vastly increased pension checks for themselves. Those few Individuals who make more than$100,000 per year in retirement constitute less than 1% of all public employees. • "Spiking a pension" is an insult to the tens of thousands of other hard- working teachers, nurses, firefighters and police officers who pay their fair share into their own retirements and count on a modest but adequate check after they retire. • Employees deserve an adequate and secure retirement that is not threatened by those few who would game the system and deplete the resources of the retirement system by unfairly increasing their own benefit payments. It’s wrong to allow the manipulation of these systems. We must be able to protect the systems, the teachers, nurses, firefighters and peace officers who depend on them, and the taxpayers from abuse. Sensible reforms will prevent abuse, level the playing field and protect taxpayers. Retirement systems have a duty to protect the health of their retirement system for the public employers and for the public employees who depend on a secure and adequate retirement. And we have a duty to taxpayers to guard against abuses that threaten the health of the system by making sure that resources are used fairly and equitably. This legislation attacks abusive practices, preventing a few individuals from putting retirement at risk for the vast majority of honest, hard-working public servants, and giving retirement systems the tools to keep their assets safe and secure. Spiking the spikes: All retirement boards will have the same power to deny intentionally spiked or manipulated pension payments to those few who claim them. Employees and employers would have to prove that the pension increase was justified. This legislation will “spike” the ability to “spike.” Vacation pay is for vacations: Employees will no longer be able to accrue years of vacation time and cash it all in at the end of their work to increase the base on which their pensions are calculated. The only thing that can be counted will be what an employee earns within a single year. No more 11th hour increases: Large severance or settlement pay for an employee headed out the door to retirement will no longer be allowed to be factored in towards pensions. And pay raises for a single individual, such as a city manager, or Fire Chief, can’t be counted unless others get similar raises. . No more revolving door: A retiree drawing a pension has to be out of the business at least six months before he or she can be hired by any other agency covered by any retirement system, even if they’re working as an independent contractor. Accountability: State and local retirement systems will have to establish accountability provisions that include regular audits and penalties for inaccurate or misleading information provided by employers or employees. Responsible funding: The legislation will give retirement systems the tools to accurately audit reported compensation and ensure proper funding of benefits through employer and employee contributions over the course of a career. The pension systems for California’s peace officers, teachers, firefighters, and others who serve the public are fundamentally sound. A small number of “bad apples” who have abused the system, and the excesses of Wall Street should not threaten the secure retirement of thousands of Californians. We must not abandon our promises to the women and men who have put in a lifetime of hard work, have put their lives on the line, and have contributed into their own retirement systems for years. Californians don't support taking away benefits away from nurses, teachers, firefighters and police officers. The fact is that seven out of 10 public employees get less than $30,000 per year in retirement, and most do not receive Social Security. That’s not a lot to live on in California. The economic crisis – and the Wall Street excesses and corporate abuses that drove it – is the real threat to retirement security for all Californians. In fact, pension funds were almost fully funded until the recent stock market crash. But individuals who abuse and “game the system” do threaten the employers who oversee the systems, the employees who count on them and the taxpayers who are worried about the viability of the funds. Rather than weaken secure retirement systems that works, we should pass sensible reforms that will continue to insure that all workers have a safe and dependable retirement. And we should be looking to promote policies that keep the middle class dream alive for every American – and that includes retirement security not only for public employees but for everyone, especially those who will rely on Social Security. THE NATIONAL COMMITTEE TO PRESERVE SOCIAL SECURITY AND MEDICARE Cutting Social Security Isn’t the Answer National Committee President/CEO Responds to Creation of Presidential Fiscal Commission “President Obama inherited an economic nightmare. It’s a nightmare America’ s seniors are living each and every day thanks to skyrocketing health care costs, no COLA, shrinking home values, decimated savings and a shaky economy. Seniors and their families want fiscal sanity returned to Washington; however, we should not be considering cuts to the very programs keeping millions afloat during this recovery. Social Security is not to blame for the nation’s fiscal problems and has not contributed one dime to our nation’s bleak debt and deficit picture. To the contrary, Social Security’s trust fund surplus has been used for years to help balance the federal books. Our hope is that this Presidential Commission will rise above the political rhetoric, do the right thing, and ensure Social Security does not become a piggy bank to pay for the fiscal failures of the past. The future of generations of Americans depends on it.”...Barbara B. Kennelly, President/CEO |
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| Chapter 25 Updates |
Chapter 25's Archives
February, 2010
February, 2010