Wednesday, February 08, 2006

Lawmaker calls for CalPERS audit

California Assemblyman Keith Richman, R-Granada Hills, is calling for an audit of the California Public Employees' Retirement System (CalPERS). Richman says he is alarmed over a $2 billion discrepancy in what a benefit increase is likely to cost state taxpayers.

Richman's bill requires the Bureau of State Audits to examine the practices of the California Public Employees Retirement System in an effort to determine whether the system is following the best policies and to learn what factors led to inaccurate projections.

The audit would also look at whether the system's policies are subject to political influence, whether its employees receive the proper training and whether its practices compare favorably to those of other pension systems.

"This is really to determine whether or not CalPERS is acting at the highest standards or not," Richman said.

Richman, who has been involved in pension reform efforts the past several years, is running for state treasurer. The treasurer has a seat on the CalPERS board.
The L.A. Daily News reports CalPERS officials blame the $2 billion difference on unexpected drops in the stock market.

Bush offers unlikely fix for imperiled private pensions

President Bush's proposed budget would inject more than $16 billion into the federal fund that backstops troubled private pension plans. But, some experts say Bush's proposal amounts to little more than window dressing.

Of the $65 billion in savings from entitlement programs that President Bush has proposed, one-fourth would come from steps to restore solvency to the federal agency that insures employer-based pension plans.

But experts say the estimates of $16.7 billion in savings over the next five years from reforms to the Pension Benefit Guaranty Corp. may be overly optimistic. They say companies can't realistically be expected to fork over enough in increased payments to reach that goal.

The proposal, part of Bush's budget plan for 2007, assumes larger PBGC premiums ``than are likely to be practically or politically feasible,''
said Douglas J. Elliott of the Center on Federal Financial Institutions.

Friday, February 03, 2006

Retired CA teachers fight to protect benefits

Retired teachers in California acknowledge the need to address a multi-billion-dollar shortfall in their pension system, but they are asking CalSTRS trustees to avoid the most draconian measure for closing it: benefit cuts.

Sell billions of dollars in pension obligation bonds. Slowly raise retirement contributions. Increase the number of years required to amortize the pension obligation.
But don't cut retirement benefits.

That's the message more than a dozen retired schoolteachers and administrators delivered Wednesday to trustees of the California State Teachers' Retirement System as the 12-member board began the task of crafting a strategy to bridge a long-term funding gap of $24.2 billion.

Union representatives for educators and teachers also urged CalSTRS leaders to guard against harsh solutions that could erode benefits for the fund's 776,000 members and future teachers.

"We would not support benefit cuts and go back to a time where the benefits were not adequate," said David Walrath of the California Retired Teachers Association.

"This is one of the world's best retirement systems. It has taken us a long time to get there. I would hate to see it destroyed in a matter of months," said retired teacher Don Maxwell.
CalSTRS, unlike the California Public Employees' Retirement System (CalPERS), cannot raise employee contributions or enact benefit cuts without enabling legislation.