Daniel Borenstein: CalPERS chief actuary silenced for telling truth

[FarCenter]

By Daniel Borenstein - Staff columnist

THE CALIFORNIA PUBLIC Employees Retirement System is trying to tamp down public concern after its chief actuary candidly said last month that government pension costs are "unsustainable."

The portfolio value of the nation's largest public pension fund, battered by the stock market and the real estate downturn, declined about 24 percent, or roughly $58 billion, in the fiscal year that ended June 30. The system serves 1.6 million public employees, retirees and their families across the state. They need not worry. Their pensions won't be affected.

Instead, state and local governments across California will have to cut services — or, less likely, raise taxes — to make up for the losses if the economy doesn't come roaring back. CalPERS is trying to soften the blow by forcing future generations to absorb a larger part of the hit. Nevertheless, the impact will start to be felt with the 2011-12 fiscal year.

Pension costs are typically measured as a percentage of payroll. Government agencies in CalPERS, for example, currently set aside for pensions about 17 percent of payroll for most workers, what are known as "miscellaneous" employees, and about 27 percent for police and firefighters. At a seminar in Sacramento, Ron Seeling, the chief actuary, described what's to come.

"I don't want to sugarcoat anything," Seeling said. "We are facing decades without significant turnarounds in assets, decades of — what I, my personal words, nobody else's — unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan (police and firefighters) "... unsustainable pension costs. We've got to find some other solutions."

<SNIP>http://www.contracostatimes.com/danielborenstein/ci_13263334

[Jeep789]

1. Falsehoods in the article:

First: They did not attempt to silence him, they said he misspoke which is pretty obvious.

Second: "Thus, while the state and local governments have been approving increasingly richer pension benefits for public employees over the past decade, CalPERS has not been setting contribution rates accordingly."

I don't know anywherein CA where pension benefits for public employees are growing. In fact, they are getting pretty downright dismal along with our health care plans.

Don't forget that public employees trade higher pay for rapidly disappearing security like health care and pensions.