Someone asked yours truly yesterday whether the GOP pension initiative actually covered existing employees as well as new hires. Apparently, there was a report that the Republican legislator in whose name the initiative was submitted had denied it. The article below - as well as the language of the initiative - makes it clear that existing employees are to be included.The article also notes that Gov. Brown is willing to accept a pension cap of $106,000. That is different from the initiative which has a 60% final pay cap. But it is unacceptable for UC faculty and would override the Regents' December decision. If such a pension deal covered UC - and the GOP initiative explicitly does cover UC - it would undermine the constitutional autonomy of the university. Yet, as far as is known, neither UCOP nor the Regents are pressing the governor on these points.
A previous posting on this blog reprinted the entire pension initiative so no one could say later that what was happening was unknown. This posting is a second warning.
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Budget talks deteriorate as GOP unveils big request list (excerpt)
David Siders and Kevin Yamamura, Sacramento Bee, 3/26/11State budget talks between Gov. Jerry Brown and Republican lawmakers deteriorated Friday as Republicans released a long list of proposals to overhaul California government that Democrats said had further divided the parties.
According to a document Senate Republicans provided to reporters, they asked Brown for pension cuts to current and future employees, as well as changes to teacher tenure that reward performance and a hard cap on future state spending, among dozens of ideas.
The Republican document also said the GOP sought a June ballot that asks voters for only an 18-month extension in higher taxes on vehicles, sales and income, while Brown wants five additional years of those tax rates. He needs at least two Republican votes in each house to place the measure before voters...
According to GOP notes, Brown is willing to accept a $106,000 per year cap on final pension amounts and impose new restrictions intended to block workers from spiking their payouts. But he rejected increases in cost-sharing, as well as any move toward a 401(k) style plan, for current employees. He was, however, open to creating a hybrid option for future workers...
Full story at http://www.sacbee.com/2011/03/26/3504845/budget-talks-deteriorate-dems.html
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We did ask some representatives of UCOP and the Regents about what was happening in Sacramento but they seemed unconcerned:
6 comments:
Dan--Thanks for this. My read on the news is that they are proposing to cover current employees as they move forward into the future--so all pension calculations from now on in will be covered. Exactly how that would work has never been clear to me as a practical matter except in terms of rising contributions.
This is great news! Now the younger faculty wil not have to subsidize their seniors who failed to subsidize their own retirements over the last 20 years.
Ask any faculty member with less than 5 years on his or her clock and they'll tell you the same: we don't want to pay for those who didn't only to find nothing left for us. Let is save for our own retirements, it's called: defined contributions!
Dear Anonymous: as someone with 4 years in the system, I feel your pain. But I think you're aiming your anger in the wrong direction.
I'm sure you noticed that there was a global financial crisis recently that destroyed billions in retirement income. Well, if you have a defined contribution plan from a previous employer, then you know that your retirement income took a major hit. Whatever the challenges of funding the defined benefit pension, there's no doubt that DB provides more secure retirement income than DC.
This proposal will treat us all alike, but the outcomes would be unfair: long time faculty, short time faculty, adjuncts, secretaries, and grounds keepers all get 60% of final income. 60% of a highly paid faculty member is a major hit, but still livable (with a lot of advance planning). 60% of a secretary's salary--not livable.
I think we can, and should, have a real debate about retirement costs. But if you want to do that, please sign your real name. No need to hide behind "anonymous" if what you have to say is reasonable.
Why should the University insure against "a global financial crises"? It should be each employee's responsibility to prepare for her own retirement. UC is an employer, not a godparent.
If you have only 4 years under your belt, then you should be aware that your ramping contributions will entitle you to less than $100 in 2011 dollars a month, come your retirement. Have you noticed that the pension is underfunded by over 40%? This is illegal for private companies, but not for public entities.
If you want to make sure that secretaries receive their entitled share in say... 20 years, then your contribution will have to increase to say... 20% of your salary; not to finance your retirement, but to finance that of all the older folk around you, who thanks to the University's generosity, have not contributed a dime for the past 20 years... n.b., this is sarcasm, as the University HAS NOT CONTRIBUTED A DIME IN THIS PERIOD EITHER!
Are you angry yet? If not, keep reading. You may have read of the UC President's desire to cancel the IRS appeal we just won after 10 years of legal battles to allow for pensions in excess of $275k... well, did you know that there is only ONE UC employee who's contract stipulates that their pension is immune to this cap? Did you know that this same UC employee negotiated 100% pension after 10 years of service? Did you know that this one UC employee happens to be the president?
I am upset, as the UC system has mismanaged their pension for the last 20 years, and I am not about to smile as I pay for their mistakes. Moving to a defined contribution system is the only sustainable solution, yet as the President said himself: "it would harm our ability to recruit"... this of course assumes those lured to the UC system by the pension alone, are too stupid to realize that it amounts to a tax which entitles others to retire comfortably.
Contact your HR department and ask if you can be removed from the pension program... I did; I said I do not want to receive any of these benefits, I want to do the responsible thing and save our school money... no luck, because it is not a benefit you are receiving, it's a tax you are paying to benefit those fortunate enough to have been employed and entitled sans any payment for the last 20 years.
/rant
So is your anger and ranting solving the pension crisis? Or just making you feel better?
We'll have to agree to disagree on the worthiness of DB pensions. I would argue that going solo on these things will not necessarily lead to a good individual outcome. The purpose of pooling risk and resources is not to see employers (or gov't) as "godparent" or nanny. The purpose is to use these institutions to pool risk and provide a baseline secure retirement.
Also, the UC did not mismanage the pension fund for 20 years. It mismanaged it in the years immediately prior to and during the financial crisis.
I tend to see the university as a collective (or at least organizational) endeavor, not just a place I happen to work as an individual. So we may have fundamentally different approaches to that. But now that you've discovered you cannot get out of UCRP, maybe you'd like to have a discussion of what to do *with* UCRP?
Obviously there are many different viewpoints on this subject. While I certainly sympathize with the pain the state of California and its residents (including those employed by UC) are having there are some hard realities in what they are trying to do. I am a full-time professor at UCLA and my "base salary" (which if you look carefully is what the "60%" is based on) is only roughly 25% of my salary and the remainder is based on production of income for UC. Our retirement (even at 100%) is already much lower than my normal salary so limiting to 60% would make it not even a living wage and no more than roughly 15% of my current income. You may think that UC employees other than secretaries, etc are living the high life but that just is not the truth. Oh, I forgot; don't forget all those years I put into school and postdoctoral training (18 total from high school) where I didn't earn money almost at all! and therefore starting earing late in life with less in savings than even a UCLA secretary). Finally, I actually bring in money for UC and believe me UC NEVER loses in that category (to them its "what is mine is mine and what is your is mine!) and out of every dollar I earn (before I even pay myself) UC takes 40-50% so would it be unfair to want some of that back?
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