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California pension cuts may have ripple effectBY ELLIOT SPAGAT, ASSOCIATED PRESS
WEDNESDAY, JUN 6, 2012 05:45 PM PDT
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SAN DIEGO (AP) Decisive victories for ballot proposals cutting retirement benefits for government workers in two of the largest cities in the U.S. emboldened advocates seeking to curb pensions in state capitols and city halls across the nation.
The voter responses in San Diego and San Jose were stinging setbacks for public employee unions, which also came up short on Republican Gov. Scott Walkers recall victory in Wisconsin.
The message is that if elected officials and public employee unions do not responsibly deal with this issue, voters will take things into their own hands, said Thom Reilly, former chief executive of Clark County, Nev., now a professor of social work at San Diego State University. We could see more draconian measures from citizens.
In San Diego, two-thirds of voters favored the pension reduction plan. And the landslide was even greater in San Jose, where 70 percent were in favor.
San Diego Mayor Jerry Sanders, a chief backer, said he was surprised by the margin of victory and considered it a statement that voters wont tolerate benefits that are more generous than those they receive working at private companies.
It just shows the frustration people have with pension benefits that are out of control and taking away from city services, he said in an interview Wednesday.
San Jose Mayor Chuck Reed, a Democrat who called the overhaul his highest priority, said he expects other governments to follow their lead.
Mayors across the country are very interested. Were at the leading edge but were not alone, he said.
Opponents say the measures deprive workers of benefits they were counting on when they got hired. Some workers decided against potentially more lucrative jobs with private companies, figuring their retirement was relatively safe.
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More: http://www.salon.com/2012/06/07/california_pension_cuts_may_have_ripple_effect/singleton/
Don't know about city/state public jobs in California, but Federal jobs and local jobs anywhere I've lived don't pay as well as private sector, but the benefits often make up for it. How else would they get employees?
Honeycombe8
(37,648 posts)And there IS something in between crummy benefits and free healthcare for life, which is a bit much in this day and age.
exboyfil
(17,862 posts)When a private company wants to stop a pension, they can freeze and lock benefits at some actuarial level representing the prior promise (this has happened to me twice and to my dad as well). I would assume that public pensions would have to be handled in the same fashion. I really can't tell form the article if they are breaking promises going forward or reducing the actuarial amount already accrued. Better companies keep the old pension going for the old hires and have a new pension plan for the new ones (that is my company). Lots of people complain but my pension under the new system is still better than the company which I left.
Who really gets hurt are those pensions defined in highest five year incomes and with total year formula of service (my dad was looking at ramping up his pension about the time his company was sold and the pension was frozen). I was still early in my career so it did not hurt as much.
For these things perhaps a scalpal approach is better than a meat cleaver. You have to admit that the current method calculating many high profile pensions is insane.
Good luck if the economy ever gets better in recruiting public sector workers though for those adopting this approach.
The funny thing about the California state level pensions that are outside of Social Security - they actually save the state money (the state only has to kick in 2% versus the 6.5% they would otherwise have to kick in). The state worker kicks in about what he would under Social Security and the benefits as currently defined are much better (without a backstop by the California government so far - that might change though).