Posted on 02/10/2005 3:57:23 PM PST by NormsRevenge
SAN DIEGO – Gov. Arnold Schwarzenegger made a stop in San Diego today to push his plans to reform California's $171 billion pension system.
Flanked by two armored cars along San Diego Bay, Schwarzenegger said California's retirement plan is "bleeding our state dry."
The governor proposed revamping the California Public Employees Retirement System in his State of the State address last month.
He wants to change from a defined benefit to a defined contribution plan for new employees – a switch that must be approved by the state Legislature.
Under that plan, state workers would contribute to an investment account similar to the 401(k) plans common in the private sector.
According to Schwarzenegger, California's pension obligations have risen from $160 million in 2000 to $2.6 billion this year.
He said what's good for the state would also be good for San Diego, which faces a $1.3 billion deficit in its pension system.
"What San Diego needs is the same thing that California needs, a responsible, affordable, stable pension system," Schwarzenegger said.
"With a defined contribution plan in place for California, we won't have billion-dollar pension deficits sneaking up on us," he said. "We won't have cuts in services to finance our state retirements, and we won't have taxpayers left holding the bag for political giveaways up in Sacramento."
California Governor Arnold Schwarzenegger, surrounded by props, conducts a news conference Thursday Feb. 10, 2005 in San Diego, to push his plan for pension reform.
A game of financial chicken lies ahead. We'll see who 'Brinks' first. ;-)
bttt
Wake me when Arnold pushes for immigration reform ;-)
Yeah, now if he could unsign the Sierra Nevada Conservancy and unappoint a few leftists, greenos and dems from posts ,, he'd really be headed the right direction.
If California goes under will the entire US be far behind ?
Not to treat the immigration issue lightly, but pension reform is the single most important issue that must be tackled...immediately. If placed on the ballot, pension reform will be approved by the voters, despite millions of dollars spent by the unions. The net long-term, positive effect on taxpayer dollars would be enormous. I would hope that any pension reform plan would place a cap on "employer contributions" at 3%, just like the private sector.
Not to treat the immigration issue lightly, but pension reform is the single most important issue that must be tackled...immediately.
=======
Well when the reforms of the pension issue can net the state more than $10B to $15B dollars annually, then it will be more important than the immigration issue. Not to slight all the other issues that are attached to the invasion of illegals into our state...such as the importance of our borders, our soverignty, the meaning of our laws, U.S. citizenship, and national security. Maybe the pension system may have to wait...IF WE CAN GET ANYONE TO PAY ATTENTION TO THE ILLEGAL IMMIGRANT ISSUE...which is a tragedy and a travesty upon this country...
There is much reason to question turning to 401(k) plans, including the possibility that the transition costs will eat up any savings. One alleged justification, the rise in state pension costs from $160 million in 2000 to $2.6 billion today, is simply deceptive. In 2000, an anomaly, a booming stock market nearly eliminated the need for the state to contribute to the fund. Pension costs are not doubling annually.San Francisco Chronicle
-- Current shortfalls in some municipal pension funds are not because of bloated benefits. Rather, they are the result of the precipitous drop in the stock market in 2000-2001 that affected even giant pension-fund managers such as CalPERS. Yet the governor and his friends now want to shift all the stock- market risk from fund managers to employees.-- Defined-contribution plans are not cheaper to administer. According to CalPERS, it costs 18 cents per $100 invested to administer a defined-benefit plan. At the same time, it can cost up to $1.35 per $100 -- or nearly eight times as much -- to administer a 401(k)-type plan.
(snip)
Indeed, a report two weeks ago by Milliman Consultants and Actuaries found that Los Angeles County would pay nearly $1.3 billion more to administer the Schwarzenegger/Richman pension plan between 2007 and 2017 than it would pay for the current plan. And the Schwarzenegger/Richman plan would not result in a net savings until at least 2024.
I can dig it.
According to the article this only affect new hires.
near term in monies,, negligible but as it rolls out and gets its legs, the cost in legal fees for property owners caught amidst its unfolding legalities and controls that disenfranchise business and property owners, the sky is the limit.
If so, then the article is incorrect in that respect. The Governor's plan aims to induce workers presently in the system to "opt out" in exchange for a one time 'bonus'. Those who remain in the system will be required to both pick up the resulting shortfall in those workers' contributions and to pay a portion of what had been the State's contributions.
If you do the math, you will find that the anomaly is not losses, it was great GAINS,
thereby making the 2000 contributions abnormally LOW.
Unfortunately, the state then spent the difference on other 'freebies'.
Get this: there are no savings in this proposal. It will cost more!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.