I would trust the private sector more than the State of California or any other state for that matter.
I agree with trusting them also, but have you noticed that almost all the states that have massive problems with their pensions also have their legislature controlled by a single party?
What I believe this means is those who are put in charge of the funds are also of that party and there is very little oversight as to where the funds are directed.
Investing pension holdings into companies that might not be the soundest of financial decision but will guarantee large donations to the party, or help prop them up for ideological reasons is what I think might be happening. Take the green movement for example, how many liberal leaning states gambled heavily in investments concerning solar and wind instead of guaranteed returns in more conventional energy companies. Just one example, but I think nationwide ideological investment rather than sound standard practices found in the private sector could account for some big losses adding up.
I would trust the mob more than the State of California or any other state for that matter.
You’re right on the money there.
I work for the State of CA and my pension is with CALPERS, and I would LOVE it if they’d do away with our defined benefit plan and switch us over to defined contribution.
That’s because I truly fear there won’t be anything for me otherwise when I go to retire in 15 years (that would be the soonest I could retire).
There are two ways that they could make the switch, and both of them seem very fair to me.
One, they could determine exactly how much funding each employee has contributed plus what the State was supposed to contribute each month (it’s printed right on each of our pay stubs, so it should be trackable), add in a fair interest rate based on average market increases each year, and move that specific sum over into a 401K-style plan that each employee then manages from then on.
Or, they could pick a date and give each current employee their defined benefit amount on retirement based on that date (so, for example, if I had worked 10 years as part of PERS up to that date, when I turn 55, I get 20% of my highest pay), and then after that date, we all get switched to a 401K-style plan (and whatever I end up getting above and beyond that 20% is based on how wisely I invested the funding I contributed).
I’d take either of those options in a heartbeat over waiting and hoping that CALPERS is still solvent by the time I’m supposed to retire. Same goes for social security, now that I think about it.