Untouchable Pensions May Be Tested in California
Mary Williams Walsh, NY Times, 3/17/12
When the city manager of troubled Stockton, Calif., had to tell city council members why it was on track to become the biggest American city yet to go bankrupt, it took hours to get through the list.
There was the free health care for retirees, the unpaid parking tickets, the revenue bonds without enough revenue to pay them. On it went, a grim drumbeat of practically every fiscal malady imaginable, except an obvious one: municipal pensions. Stockton is spending some $30 million a year to pay for them, but it has less than 70 cents set aside for every dollar of benefits its workers expect.
Some public pension experts think they know why pensions were not on the city managers list. They see the hidden hand of Californias giant state pension system, known as Calpers, which administers hundreds of billions of dollars in retirement obligations for municipalities across the state.
Calpers does not want cities like Stockton going back on their promises, and it argues that the state Constitution bars any reduction in pensions and not just for people who have already retired. State law also forbids cuts in the pensions that todays public workers expect to earn in the future, Calpers says, even in cases of severe fiscal distress. Workers at companies have no comparable protection.
full: http://www.nytimes.com/2012/03/17/business/untouchable-pensions-in-california-may-be-put-to-the-test.html?pagewanted=all
PBS Newshour also had a story about Stockton bankruptcy threat today:
DJ13
(23,671 posts)Pensions shouldnt be considered a "promise", they really need to be thought of as negotiated contractual obligations.
dwilso40641
(198 posts)Should be put in an account as they are earned. After they are earned the company has no right to them. They should be considered as part of the wages.
msongs
(67,406 posts)ProgressiveProfessor
(22,144 posts)and has just lowered its earnings estimate, meaning it will need more money to cover obligations.
While ***THIS*** is not a CALPERS issue, CALPERS has plenty of its own including bad investments and questionable management decisions.
Note: I am paying into CALPERS and have a vested interest in how this works out.
FreakinDJ
(17,644 posts)and are NOT eligable for Social Security
This is more like an employer cheating on taxes and screwing the employee