Governor Jerry Brown will soon ask California residents to vote on pension reform that he believes will bring the state back from the brink.
The reform includes increasing the retirement age for future employees from 63 to 67, hiking employee contributions up to fifty percent of annual pension costs, and a future model that is a hybrid of 401k and defined-benefit plan. Additionally, no overtime or bonuses would be calculated into the retirement formula, and double dipping would be banned.
According to media reports, ultimately retirement pay, including social security, would replace about 75 percent of an employee’s salary.
While the effort is being lauded, the reality is that both political parties in California are supported by labor unions. As a result, there is very little interest in taking on current employee benefit plans for fear of political repercussions.
Interestingly, on the horizon is a ballot initiative to dramatically change the current pension system. Reform would include anti-spiking measures as well as higher contribution rates and further separation of existing and new employee plans.
Original coverage can be read here, as can updates from the California Committee on Pension Refom.