Public Employee Pensions

By Pat Furey

Much has been said and written recently about public pensions and the unfunded portion owed by cities and other municipalities to CALPERS. It is true that the unfounded pension liability has increased. However, what has been ignored is how things got to where they are and what the State of California and Torrance have been doing to remedy the situation.

But, the CALPERS investments have rebounded pretty well. The last fiscal year saw investment earnings of more than 13% and the investments have averaged almost 12% over the last 4 years.

A fact that is generally ignored and actually should be noted is that the average pension benefit under CALPERS is just a little over $3,000 per month. Critics always seem to ignore that fact and only refer to the higher pensions of long-term executive and safety officers.

Just a few weeks ago I sat and discussed the future of pensions in California with Rob Fechner, the President of CALPERS, and he explained what happened before he came on board. He personally assured me that prudent and conservative investments are now the mantra. And, considering the investments have bettered the 7.5% to 7.75% assumed return on investment, it seems to be correct.

The other major impact on CALPERS was in 2003 when more than 250 cities and other municipalities throughout California + including Torrance + agreed to increase the pension return to safety officers from 2% per year to 3% per year. Those increases were done when CALPERS was over-funded and done as part of the bargaining process, in lieu of wage and other benefit increases.

In 2011 Torrance did a major reform where new safety employees will be funding 9% of their pay toward their pension. Additionally, the State of California increased the age for retirement for safety officers. And, the state mandated additional payments by the employees, lowered the pension return to a maximum of 2.7% and raised the age of retirement to 57. Those reforms don't cure the problem today, but futuristically they will.

As a Child Abuse Prosecutor for the County of Los Angeles, I am fortunate enough to be a member of a public pension retirement system + LACERA. And, as of March 31, 2014, I will start receiving my retirement benefits. And, frankly, I am not ashamed to say I deserve every penny that I will be paid. It was one of the things I considered when I took a 40% pay cut to work in the public sector. I gave up the money in my pocket for the security to be paid later.

Would it be fair for the County of Los Angeles to renege on its promise? Of course not. Likewise it would not be fair for the City of Torrance to renege on its promise to our employees.

I understand the frustration of those who may have lost a portion of their savings due to the recession or experienced diminished pensions because their employer made imprudent investments, but that is no reason for any government to renege on its obligations.

I firmly believe that CALPERS is headed in the right direction as is our nation, state, region and city. It will take time, but with effective leadership, we will get there.