Posted on 07/20/2009 9:29:22 PM PDT by Steelfish
CalPERS expected to report losing nearly one-quarter of investment portfolio
The estimated $56.8-billion drop at the U.S.' largest pension fund, the second annual loss in a row, would have a huge effect on what state and local governments must shell out to support retirees.
Marc Lifsher July 20, 2009.
Reporting from Sacramento -- California's huge government pension fund is expected to report on Tuesday a whopping annual loss of an estimated $56.8 billion, almost a quarter of its investment portfolio.
The loss at the California Public Employees' Retirement System for the fiscal year ended June 30 is the second in a row for the country's largest fund.
A year ago, CalPERS reported a $8.5-billion loss, as the severe recession began to take hold.
The tremendous drop in value is expected to have a direct effect on the amount of money that the state and about 2,000 local governments and school districts must contribute in coming years to pay for pensions and healthcare for 1.6 million government workers, retirees and their families.
As income from the pension investments fall, the governments would have to make up the difference to meet the state's pension and healthcare obligations.
In the fiscal year that ended a year ago, CalPERS' holdings in stocks, private equity, real estate and commodities positions were worth $239.2 billion. They fell to $182.4 billion on June 30, down 23.7%, according to daily postings on the fund's Internet site.
CalPERS hit a record-high balance of $247.7 billion on June 30, 2007, and it earned double-digit returns for the five fiscal years from 2002-03 to 2006-07.
Without those kinds of flush years, CalPERS could have a difficult time getting the average annual return of 7.75% that its actuaries say it needs to meet obligations to retirees without drastically raising employer contributions.
(Excerpt) Read more at latimes.com ...
MArket up on better than expected freaking disaster.
How long do you think it will be yet before they come to the federal govt asking for a bailout for their overbloated state pension fund?
And yet, the market keeps going up...
as a stock watcher, I've seen some of the investments CalPers has made - no doubt they lost money.
However, it's about time that state/county/localgovt pensions were brought back into line with private sector pensions - without taxing the private sector for the losses - and that means reducing pensions by at least 50% - retirees with 5K, 8K, 10K a month starting at age 50 are unreasonable and outrageous when compared with pensions available in the private sector, if available at all.
That’s some hit. Gone with the wind.
Put it paper meng 0_0
Or even “in paper” lolz
Not so fast. State employers (read taxpayers) will have to cough up the difference. Read the whole article. What a topsy-turvy world.
“And yet, the market keeps going up...”
Fear not, it will tank.
NOT THE TOP OF THE LIST
“Special Nurse” $350,000+
Municipal railway manager:$325,000+
“Administrative services” department head $280,000+
State college workers salaries:
JEFF TEDFORD UC BERKELEY HEAD COACH-INTERCOLG ATHLETICS $2,831,654
PHILIP E LEBOIT UC SAN FRANCISCO PROF OF CLIN___-MEDCOMP-A $1,979,362
TIMOTHY H MCCALMONT UC SAN FRANCISCO PROF OF CLIN___-MEDCOMP-A $1,945,717
RONALD W BUSUTTIL UC LOS ANGELES PROFESSOR-MEDCOMP-A $1,570,897
RICHARD J SHEMIN UC LOS ANGELES PROFESSOR-MEDCOMP-A $1,195,837
KHALIL M TABSH UC LOS ANGELES HS CLIN PROF-MEDCOMP-A $1,048,891
BEN BRAUN UC BERKELEY HEAD COACH-INTERCOLG ATHLETICS $998,569
http://www.sacbee.com/1098/story/1669273.html
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Dan Walters: Big costs loom for state beyond deficit
Sacramento Bee | 5/19/09
FR Posted on Tuesday, May 19, 2009 by SmithL
When the governor and legislators talk about balancing the state budget, they're talking about closing the gap between revenues and required expenditures, either by increasing the former or reducing the latter. The task becomes more difficult by the minute.
Looming on the not-too-distant horizon, however, are some other huge obligations that the current crop of elected officeholders has chosen to ignore, because acknowledging them would make closing the chronic budget gap just that much harder.
There is, for example, a potentially huge increase in the "contribution" that the state must make to the California Public Employees' Retirement System to cover public pensions.
CalPERS has seen its once-immense investment portfolio shrink dramatically, due to recession and some truly boneheaded investments, such as a $1 billion haircut on raw land in Southern California. Big increases in pension benefits, enacted a decade ago, are also a factor.
CalPERS won't tell the state how much its boost will be until sometime next year, but it could be hefty, unless CalPERS postpones the pain by stretching out the bite over several years – which would merely postpone the pain. An even bigger headache is a new requirement that state and local governments identify and quantify their obligations for providing health care to their retired employees. The state auditor's office and an advisory commission told the state two years ago that its unfunded liability for health care is $48 billion.
State officials were advised to commit $3.73 billion during the current fiscal year to begin shrinking the unfunded liability, but the state is paying just $1.36 billion to cover its current costs. The Legislature, under the sway of unions, rejected Gov. Arnold Schwarzenegger's plan to overhaul employee health care to save money, but he's trying again, seeking to increase the amount of time it takes...(Excerpt) Read more at sacbee.com ...
“As income from the pension investments fall, the governments would have to make up the difference to meet the state’s pension and healthcare obligations. “
When the money isn’t there, it’s not “the government” they expect to pick up the “obligations,” it is we the taxpayers they expect to make it up.
What’s fair is fair, and taxpayers should never have to pick up for what a speculationg government lost.
10K a month at age 50?
It must be in error or at least remarkably rare.
Okay, I just went to the Calpers website, and found this...Average Monthly Pensions
CalPERS would like to set the record straight about the size of a typical CalPERS pension benefit. The average monthly pension for a CalPERS retiree is $1,985 – about $23,808 per year. Approximately 78 percent of CalPERS retirees receive annual benefits of $36,000 or less...
.
The line “Big increases in pension benefits, enacted a decade ago,” really hit home. Wisconsin is dealing with the same garbage.
When the market was going great guns, the unions went to the state and said they were being ripped off. They weren’t getting full value from the pension fund and the payouts should be increased. Now that the market is down, the pension fund is in trouble.
Milwaukee county did the same thing on a massive scale.
It’s absolutely criminal how the public employees unions work to steal from the taxpayers.
Did they let Bernie Madoff run this fund?
I think that under the circumstances, the taxpayers might want to pick up and leave if that happens.
What is much more interesting reading is how feckless CalPERS was in their investment strategy.
How feckless? Well, let’s go read their lawsuit against the public rating agencies, S&P, Moody’s and Fitch’s:
http://www.zerohedge.com/sites/default/files/Calpers%20Lawsuit.pdf
OK, here’s the juicy stuff:
“86. Only the SIV manager and the Rating Agencies knew what assets made up Cheyne, Sigma and Stanfield Victoria. The exact make-up of assets was treated as confidential, lest anyone, even investors, learn CUSIP-level data of what was contained in the SIV’s and be able to copy it.”
This shows a level of gullibility on the part of CalPERS management that is shown only by children before the first time they’re con’ed out of their lunch money. If this is what passes for the judgment of an “investment professional,” no wonder Wall Street is a wreck. I might believe that individual bonds are “AAA” or equivalent, but there is no way that I’d believe some opaque mish-mash of stuff is “AAA.” It isn’t just the rating or quality of each individual security in the SIV that is at question; there’s also the issue of how much of each security is in the composite instrument, in both dollar amount and duration.
Utterly fantastic that CalPERS would buy so much “black box” crap - with pension money. I could perhaps let this go if this were only hedge fund or other speculative money, but *pension* money? Insane.
What the h#&! have they been invested in?
“Approximately 78 percent of CalPERS retirees receive annual benefits of $36,000 or less”
It really depends on how much double or triple dipping they do. You can get a calpers pension plus a federal one and social security and an oregon pension, etc.
link:
http://www.usatoday.com/money/perfi/retirement/2008-07-16-doubledippers_N.htm
States are cracking down on a controversial practice that lets government workers collect pension benefits while continuing to work for a salary.
The practice — called “double dipping” — lets tens of thousands of state and local workers retire, collect pension benefits and then keep working, often at the same job.
“What was going on was absolutely ludicrous,” says Kentucky state Rep. Mike Cherry, a Democrat. Kentucky’s Legislature last month ended a policy that let workers retire, get rehired and start a second pension in addition to the first.
Double-dipping is legal in nearly every state under existing pension and hiring rules. It is especially common among educators, police officers and others who retire young after 20 to 30 years on the job.
Supporters of double-dipping say rehiring retirees is a cost-effective way to tap experience.
FIND MORE STORIES IN: Internet | Arizona | Massachusetts | Kentucky | San Jose | St. Petersburg Times | Santa Clara Valley Water District | Florida Retirement System
Olga Martin Steele, 60, earns $252,000 a year as interim chief executive of the Santa Clara Valley Water District in San Jose plus another $180,000 a year in pension benefits from 30-plus years of government service.
“The benefit of someone like me is I know the organization, the people, the community,” she says. The water district saves money because, as a temporary employee, she doesn’t get medical or other benefits.
States are limiting double-dipping in response to newspaper reports and audits. The St. Petersburg Times found that Florida has more than 8,000 double-dippers and 121 “triple-dippers” — workers enjoying two pensions and a salary. As the Florida Retirement System puts it, workers may “retire without terminating employment.”
Double-dippers include elected officials, school superintendents, university presidents, police chiefs and other prominent public servants.
Legislators in Arizona, Florida, Massachusetts and elsewhere have introduced legislation to curb double-dipping. Elsewhere:
•New York. The Legislature limited double-dipping. The state last week ordered school districts to prove that rehiring retirees was needed and to post compensation data on the Internet.
•New Jersey. The Legislature limited pension benefits for part-time workers.
more on double dipping
Probing Pensions: double
dippers
Exposing workers collecting a
paycheck & a pension
Updated: Thursday, 06 Nov 2008, 11:23 PM EST
Published : Thursday, 06 Nov 2008, 11:13 PM EST
Tim White
PROVIDENCE - It’s a good deal if you can get it; collecting a pension and a public paycheck at the same time. It’s called “double dipping.” The state of Rhode Island and some cities limit the practice, but in many cases it’s perfectly legal.
A Target 12 investigation uncovers hundreds of people who are double-dipping and, in some extreme cases, triple-dipping. So why is it ok for some, but not for all? It all comes down to which public pension plan you’re in. Hidden in the pension database we spent five months compiling, we find some of the state’s top double-dippers:
-State Lottery Director Gerald Aubin collects $122,000 a year in state salary, and a $36,000 yearly pension from Providence as a retired police officer.
-John Chartier nets a $101,000 salary as top dog at the state Fire Marshal’s office, and an $86,400 yearly pension as former Warwick fire chief.
-Providence D.P.W. Director John Nickelson gets a $100,000 salary, plus an $87,600 yearly state pension when he worked for the Department of Transportation.
-Providence Communications Director William Trinque has a $98,000 salary, plus a $79,200 yearly grab from his state police pension.
Double-dipping often leads to multiple pensions. Here are some heavy hitters:
-Former Paolino Chief of Staff Vincent Pallozzi nets $58,500 a year from his city of Providence pension, and $87,000 a year as a retired state traffic judge.
-Gerald Leddy injured himself on the job as a Providence firefighter, then hurt himself again working at the state Fire Marshal’s office, resulting in two tax-free pensions totalling $56,400 a year.
We also found a handful of triple-dippers:
-Charles Donovan has a state pension, a pension as a legislator, and one from when he was a city of Warwick politician.
It may sound outrageous, but it’s not illegal.
“That’s what the statute says, basically,” said Frank Karpinski, Executive Director, State Retirement System.
The state pension system, includes state workers, teachers, and employees from many cities and towns.
By law, Karpinski says you can’t collect a state pension and a state paycheck at the same time. You’d have to put your state pension on hold if you went back to work for the state full-time.
But in many circumstances, it’s perfectly legal for public employees to collect a pension or even two on top of their paychecks. For retirees from cities or towns with their own pension plan, like Providence, Warwick or West Warwick, it’s okay to collect a state check and a city pension at the same time.
“The only difference there is they are contributing to one pension plan and they are making contributions to another plan, but again, that is the statute,” said Karpinski.
A prime example of this practice is the state Fire Marshal’s office. We found seven out of nine people on the executive staff are collecting a paycheck and a pension from a city or town outside the state pension system. One is even getting a tax-free pension for getting hurt on the job from the Providence Fire Department. We went to their boss, state Fire Marshal John Chartier for reaction.
When asked if would have taken his position with the state if he had to suspend his pension with Warwick, Chartier responded, “Um, no I wouldn’t.”
Chartier says his executive staff averages $54,000 a year salary - much lower than what they could get in the private industry. He says collecting the pension is a necessity.
“Quite frankly, I could not get the people I have in this office and their umpteen years of institutional knowledge they bring with them if the situation was different,” Chartier said.
After obtaining and comparing pension data from the state and five cities and towns, we find at least 240 people collecting more than one pension, or a pension and a full-time government paycheck.
“This idea of a system where you can work and collect is wrong,” said Providence Mayor David Cicilline.
Cicilline supports a unified state pension system, meaning the double-dipping statute would apply to everyone.
“Pensions are designed to give people economic security when they are done working, or when they are disabled. And we need to get back to that principle,” Cicilline said.
Critics of the double-dipping statute say it’s too broad and discourages qualified workers from bringing experience to other positions.
The only exception to the state’s double-dipping statute involves retired state troopers, since they have forced retirement at 30 years of service. Their expertise is often used to run local police departments. By our count, nine towns currently have a retired state trooper as police chief.
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