CalPERS financial struggles are draining state taxpayers. The ever-increasing contribution rates it demands from state and local governments have already bankrupted several cities. Even for more financially stable agencies, increased CalPERS contributions have crowded out other spending priorities or tax relief.
While discussions about unfunded liabilities and projected rates of return are necessary and important, the average member of the public is too busy to dive into the details.
Even a casual glance at the data, shows the root cause of CalPERS’ financial struggles: It’s paying tens of thousands of its government retirees pensions that dwarf what private-sector households make while working full-time.
The U.S. Census reports that the median household income in California is $61,400. This includes households where two adults are working full-time. The data on Transparent California though shows that the average 2013 pension for those who worked 30 years or more and received a full year’s pension was $64,448 for the year.
For those who retired in 2000 or later, the average pension was $68,403.
And whose taxes are going to increase to ensure that the retiree making over $64,400 a year receives a generous cost of living adjustment next year and every year thereafter? The working couple, despite making less in salary than the public servant receives in retirement. No wonder so many people have a hard time saving for their own retirement — they’re already subsidizing the retirement of California’s government employees.
Unfortunately, Social Security isn’t going to provide these private-sector families with equity. While the average 30-year government employee will collect an average payout of over $64,400, that’s more than twice the maximum Social Security benefit of $31,704 that a private sector retiree could receive after working for 35 years and retiring at the age of 66. In contrast, some government workers retire as early as 50.
These high pension payouts are actually understating the compensation received by CalPERS retirees. These payout amounts do not include health benefits received by retirees that are worth up to $18,000 a year.
Just a glance at the list of highest paid retirees shows why taxpayers should be so outraged.
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Mark Bucher is the president of the California Policy Center.