Public Pensions

An article from the California Chamber of Commerce, reporting on a Little Hoover Commission report, that if followed, would impact public pensions substantially, might also impact those from the nonprofit sector.

An excerpt.

“(March 4, 2011) With the debate over public sector pension costs roiling the nation, a bipartisan, independent state commission released a report charting a bold path for pension reforms that would create both short- and long-term budget savings.

“The Little Hoover Commission unanimously adopted Public Pensions for Retirement Security, calling for legislative action to establish the legal authority to allow state and local governments to freeze pension benefits for current workers, and allowing those workers to accrue future benefits under more sustainable pension plans.

“Reform for Current Workforce

“After 10 months of public hearings and background research, commissioners concluded that California’s pension crisis cannot be solved without addressing the obligations of current employees, many of whom have accrued generous benefits augmented during the go-go years of the dot.com and real estate bubbles.

“Without doubt, the proposal will face significant political and legal hurdles. But ignoring the burden that the current obligations place on government budgets and on taxpayers is like pretending the underwater earthquake won’t create a tsunami. The disaster will happen; the only question is how soon. In the words of the commission’s report, “Pension costs will crush government.”

“The commission included a number of forward-looking reforms, too. It recommended a “hybrid” pension model that combines a lower defined-benefit pension formula with an employer-matched and risk-managed defined-contribution plan.

“The commission also suggested that the state explore extending Social Security old-age benefits to uncovered state and local employees, as is the case with the federal workforce.”