Schwarzenegger backs plan to reform state pensions

San Francisco Chronicle, April 21st, 2010

Gov. Arnold Schwarzenegger on Wednesday announced his support for a
legislative proposal to reform the pensions of state workers, saying the
changes are necessary to avoid a future budget calamity.

Pension reform was among the priorities he targeted in January, the
beginning of his final year in office. The bill mirrors changes he
suggested last summer.

Schwarzenegger said the pension system’s unfunded liabilities
represent the single biggest threat to California’s fiscal health.

“I refuse to pass this crisis on to the next governor or the next
Legislature,” Schwarzenegger said. “Because if you don’t act, if you
continue to sweep those problems under the rug, you’re just going to be
piling on more and more debt onto our children and grandchildren.”

As of July 2008, California’s two major pension funds estimated their
unfunded liabilities at $61 billion.

The Republican governor joined the bill’s author, Senate Minority
Leader Dennis Hollingsworth, R-Murrieta, at a news conference in the
Capitol.

The legislation would adjust the pensions of newly hired state
workers but leave benefits intact for current employees. It also would
require most new state employees to work 10 years longer — until age 65 —
before being eligible for retirement benefits and would increase the
amount employees must contribute toward their retirement.

Public safety employees, including firefighters and highway patrol
officers, have a current retirement age of 50 but would have to work
seven years longer to qualify for full retirement benefits under the
bill.

They receive better retirement benefits packages than other
employees, in part because of the risks they face on the job.

Some state workers such as milk inspectors and billboard inspectors
are currently classified as safety workers. The bill would reclassify
them as industrial employees, reducing their benefits.

Read more of this article.

Retirement Calculator:  Are you a retired or retiring public sector employee whose pensions are being affected?  If so, you might want to consider how this will affect your retirement.  You can use our Retirement Calculator to find out where you stand.

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