April 30, 2013

UNDERFUNDED/OVERGENEROUS PUBLIC PENSION UPDATE: Cities ask workers to pay their own pension costs. “Pension costs have caused several recent high-profile municipal bankruptcies recently, so other cities are trying to avoid suffering similar disasters by asking employees to begin paying part of their pension costs. In Sacramento, Calif., City Manager John Shirey said today he will hire 58 new police officers only if current officers agree to pay the employee share of their pension payments. The police union is one of few groups of employees in the city who don’t pay any of their own pension costs, according to the Sacramento Bee. Most public pension plans are set up with a set contribution for employers and employees, but employee unions often negotiate for employers to pay both the employer share and some or all of the employee share, which makes pension payments a large chunk of many cities’ budgets. Bankrupt Stockton, Calif., for instance, owes the California Public Employees Retirement System $900 million.”