January 14, 2018

THE UNSUSTAINABLE WILL NOT BE SUSTAINED:

California's Brown Raises Prospect of Pension Cuts in Downturn (Romy Varghese, 1/14/18, Bloomberg)

California Governor Jerry Brown said legal rulings may clear the way for making cuts to public pension benefits, which would go against long-standing assumptions and potentially provide financial relief to the state and its local governments. [...]

That would be a major shift in California, where municipal officials have long believed they couldn't adjust the benefits even as they struggle to cover the cost. They have raised taxes and dipped into reserves to meet rising contributions. The California Public Employees' Retirement System, the nation's largest public pension, has about 68 percent of assets needed to cover its liabilities. For the fiscal year beginning in July, the state's contribution to Calpers is double what it was in fiscal 2009.

Across the country, states and local governments have about $1.7 trillion less than what they need to cover retirement benefits -- the result of investment losses, the failure by governments to make adequate contributions and perks granted in boom times.

It's not fair to wait for a downturn.

Posted by at January 14, 2018 10:22 AM

  

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