Preserving Retirement Security

By Betty T. Yee

California needs to work diligently to ensure public employee and teacher retirees as well as private sector workers can realize retirement security at the end of their careers.

The CalPERS board, the CalSTRS board, the Legislature, the state, and local governments and schools districts as well as CalPERS and CalSTRS members all must be active participants of the array of solutions necessary to address preserving retirement security.

While some will quickly dismiss define benefit plans as obsolete, eliminating define benefit plans would significantly exacerbate the crisis of income inequality, potentially driving more of our retirees into poverty. Any changes to retirement benefits as well as contribution levels must be determined with all parties at the negotiating table.

There are some measures the CalPERS and CalSTRS boards, on which the Controller serves, as well as the Legislature, can undertake to better ensure retirement security. First, more active management of asset allocation can help with better identifying and addressing risks before huge investment losses occur. Second, we all must be vigilant in addressing the escalating costs of retiree health care and other cost pressures for retirees, such as housing. And third, in addition to lowering retiree costs, there must be focus on how to improve the earnings and labor market prospects for older workers preceding retirement.

While these challenges to preserving retirement security appear daunting, they require immediate attention and all parties convening to address them successfully.