Average CalPERS Pension Up To 5 Times Greater Than Comparable Social Security Payouts

CalPERS officials are fond of saying that their average pension benefit is only about $31,500 – suggesting that CalPERS members’ benefits are at Social Security-type levels.

On this basis, they argue it’s a “myth” that public pension benefits are excessive.

But is that really true? What happens when something like Social Security’s benefit assumptions – a full career of employment and minimum income levels – are used in the comparison?

When accounting for these factors, CalPERS is unable to hide behind the misleading cover of a raw average – CalPERS benefits are up to 5 times greater than the comparable Social Security payout.

We filtered the 2013 CalPERS pension data for retirees with at least 30 or more years of service credit to create parity in the comparisons between the Social Security benefit estimates, which assume 35 years of employment and a retirement age of 64 and 4 months. Social Security estimates were generated with the Social Security Administration’s Quick Calculator Benefit Estimates tool in October, 2014. CalPERS 2013 data is provided by TransparentCalifornia.com. By contrast, the average age of retirement for CalPERS members is only 60.

Next, we analyzed CalPERS retirees by their pensionable compensation. The top pensionable compensation bracket is greater or equal to $117,000 – the maximum taxable earnings limit for Social Security. The remaining brackets move down in 25% increments from there.

20150102_Fellner_PvsSS-1

While the CalPERS values above represent the actual average pension received for the 2013 year, the Social Security benefit is an estimated figure. The SSA’s Benefit Estimator Tool requires a final salary, similar to pensionable compensation, in order to generate its estimates. We used the average pensionable compensation of the respective CalPERS retirees being compared to as the final salary for estimating the comparable Social Security benefit.

For example, the actual average pensionable compensation of all full career CalPERS retirees with a pensionable compensation of greater or equal to $117,000 was $146,250. Therefore, we used $146,250 as the final salary for generating the comparable Social Security benefit – $26,292.

These values, along with the average years of service of the respective CalPERS retirees, are displayed in the table below.

20150102_Fellner_PvsSS-2b

As shown above, CalPERS retirees with a reported pensionable compensation of at least $117,000 or more received an average 2013 pension benefit of $126,833. Additionally, the average years of service credit for these retirees was 33.85 and their average pensionable compensation was $146,250. By comparison, an employee who worked at least 35 years under Social Security and had a final salary of $146,250 can expect to receive a pension benefit of $26,292 in 2014.

Said differently, the CalPERS retiree with a pensionable compensation of at least $117,000 received a pension benefit nearly 5 times greater than a comparable private sector employee can expect to receive from Social Security. Those in the $87,750-$117,000 bracket received a benefit nearly 4 times greater than the comparable Social Security amount, while those with a final salary of less than $87,750 were receiving benefits over 3 times the comparable Social Security benefit.

It should be noted that the comparison of Social Security to CalPERS is not an apple to apple comparison. Most private employees participate in a defined contribution plan that will supplement their Social Security benefits. On the other hand, public employees who do not participate in Social Security are also not responsible for paying Social Security taxes. Further, CalPERS provides extremely generous health benefits for all of its members, regardless of income level, which are not captured in the values quoted above. Currently, these health benefits can cost up to $18,000 a year.

Nonetheless this comparison is a useful starting point to provide context for the value of CalPERS benefits, as opposed to obscuring them by quoting raw averages only.

Another striking inequity is the age of retirement a private sector worker needs to reach to receive full benefits, compared with a CalPERS retiree.

There is enormous value in the ability to retire at an earlier age rather than at a later one. For CalPERS retirees, they may retire as early as 55 and receive full benefits that are significantly greater than private sector retirees who, on average, have to work more years and retire later at life. For CalPERS safety officers (police/fire) they may retire as early as 50 and receive their maximum benefits.

This structure further compounds the disparity between CalPERS benefits and comparable Social Security benefits. Not only are CalPERS retirees receiving benefits that dwarf what Social Security can offer; they are able to retire up to a full decade earlier than private sector workers as well.

Given the cap on Social Security benefits, the trend demonstrated above is not surprising. As the maximum Social Security benefit one could receive in 2014 is capped at $31,704, compared to the lack of any cap whatsoever for CalPERS benefits, those public employees who receive larger salaries are going to receive exponentially greater pension benefits than what Social Security offers.

The aim of Social Security is to be a progressive tax that takes from those earning more and, consequently, least in need of assistance, and gives to those who earn less and are more in need of assistance in retirement. CalPERS, however, is essentially a wealth maximizing system. It provides lavish pension benefits for its members, with the highest earners receiving the largest share.

Perversely, these benefits are primarily funded by taxpayers who receive dramatically reduced retirement benefits from Social Security and, subsequently, are faced with a burden the CalPERS full-career retiree is immune from – the need to defer present spending in an attempt to supplement their meager Social Security benefits once in retirement.

As troubling as the inequity of CalPERS is, the more pressing issue is that it’s simply not sustainable in the long run. There are good reasons why defined benefit pension systems are heading towards extinction in the private sector.

The public sector, however, has held onto the defined benefit plan system. Given the substantial benefits CalPERS provides to their members, public employees and their unions have strong incentives to lobby on its behalf.

While a private firm would jettison any system that produces the long term liability associated with California’s defined benefit plans, politicians have little to no incentive to act on behalf of the taxpayers. The benefits received are immediate and relatively concentrated, while the costs are widely dispersed. Further, while some of the cost is beginning to be felt today, the lion’s share can be delayed for future generations, a demographic that has been traditionally ignored by today’s politician.

It is imperative that Californians recognize the true value, and cost, of a CalPERS pension, and recognize the urgent need for reform measures such as those that have been discussed exhaustively elsewhere.

*   *   *

About the Author:  Robert Fellner is Research Director for TransparentCalifornia.com, a joint project of the California Policy Center and the Nevada Policy Research Institute.

63 replies
    • Tough Love
      Tough Love says:

      Well, from you (a Public Sector retiree riding this gravy train) , that comment is actually progress, as most of the time you simply blow off the article as “sloppy work”.

      Hopefully, when the Taxpayers get sufficiently fed up with the rip-off being perpetrated upon them by the insatiably greedy Public Sector workers/retirees (such as yourself), a reduction in your excessive pensions will be part of the fallout.

      Reply
      • myles
        myles says:

        It will be a good day when people stop demanding benefits go down for the public sector, and instead demand benefits go UP for the private sector. It should be criminal the way private sector employers treat workers who are in a non competitive field.

        Further, the public sector is not the private sector. And in all reality, the private sector has to compete with the public sector for employees. In order to compete with the public sector, they have to offer appealing benefits. If the public sector had ONLY social security as a benefit, then there would be no incentive for private employers to offer improved benefits. it’s all about gamesmanship, and the public sector is an important player in keeping benefits tolerable in the private sector.

        No one is in a big hurry to start a non profit 401k company because it isn’t profitable, but imagine how much better private retirement would be if there was such a thing? Make it happen!

        Reply
        • skip johnson
          skip johnson says:

          Are you kidding me? he just explained that the Cal Pers system is a pyramid! that means it does not work in the end. And, in my experience, if you want to be paid on your abilities and effort, you work in the private sector. The best and brightest are public employees? Again, are you kidding me? I will not go so far as to say that ALL public employees could not hold a similar position, at the same wages, in the private sector. But most could not. Unmet employer expectations would result in many being terminated I’m sure. Just having a well paying government job, which in some cases should not even exist, does not automatically make you either a valuable or sought after employee.

          Reply
  1. SeeSaw
    SeeSaw says:

    Exactly, SMD! My spouse was a carpenter for over 50 years and he worked many times as hard as I did making a living. He had to battle it out on the freewyays, going and coming, each day–(he was hospitalized from a freeway accident in 1969 after the monsoon rains). His total carpenter-pension does not even pay for his PPO Health insurance premium which is secondary to Medicare, and his SS are one-half of my gross CalPERS Pension. We are extremely grateful that we have various little “pots” of income to keep ourselves solvent. If the private sector wants its retirees to be on an even-keel with public pensioners, it needs to institute better benefits for them.

    Reply
    • Robert
      Robert says:

      “If the private sector wants its retirees to be on an even-keel with public pensioners, it needs to institute better benefits for them.”

      The private sector does not have the power of taxation and cannot implement unsustainable (better) benefits by imposing the costs – through force – onto others.

      This indifference to cost that accompanies the power of taxation is the primary factor why the quality of public benefits can be so high. Unfortunately, it is this same indifference to cost that makes them unaffordable. The first step to addressing this issue is to highlight just how generous these benefits now are, which it seems we all agree on.

      I wish that these types of benefits could be provided to everyone, but it is not a noble endeavor to reward a select few at the expense of others.

      Reply
      • S Moderation Douglas
        S Moderation Douglas says:

        “Deferred compensation”, Robert.
        Public sector workers earn less in wages today. The difference is invested and returned later as a pension.

        Despite “common knowledge”, public workers do not earn “as much or more in cash wages” than equivalent private sector workers.

        In total compensation, some, not all, public sector workers earn more than the private sector. It would be a huge mistake to unilaterally reduce* the benefits of all public sector workers.

        *pension “reform” is a euphemism for reduction.

        Reply
        • Robert
          Robert says:

          Douglas,

          The first thing to note is your comment in no way addresses my point – the sustainability or equity of these programs.

          “Public sector workers earn less in wages today.”

          You are referring to a study that addresses the smallest number (10%) of public workers in California that are, by far, the lowest-paid (non-safety State employees) of all public employees. Of this segment of lowest-paid public employees in California, your preferred study found they earned roughly 12% less in wages and 33% more in total compensation than their comparable private sector counterpart.

          To repeat, when exclusively analyzing the most modestly paid (in both pay and benefits) of all California public employees, the average comparable public employee receives 12% less in wages and 33% more in total compensation. That is staggering.

          I know you are not a fan of those who mislead, so I would hope you are basing your above statement off of something more than such a misleading and biased sample size.

          Would you be comfortable with me doing an analysis of the LADWP and projecting those findings as representative of the difference in public vs private sector wages in California’s cities?

          Remember how their customer service representatives earn an inconceivable $81,000 in base pay: http://publicpay.ca.gov/Reports/PositionDetail.aspx?employeeid=10090336

          Or would you object that such a sample size is too small and biased towards the highest excess earners of public employees in California? If so, you can understand why it is equally as misleading for you to exclusively focus on the lowest earners (who still enjoy a 33% compensation premium!) and declare that as authoritative for the remaining 90% of public employees in California whom receive substantially higher pay and benefits than State employees.

          While it is always fun to go off on this tangent with you, please note it has nothing to do with the points made in my article.

          As a reminder, even the LAO has found that the liabilities associated with these pensions, as well as the lucrative health benefits not captured in our analysis above, are the State’s greatest long-term funding challenge: http://www.lao.ca.gov/reports/2014/finance/liabilities/addressing-california-key-liabilities-050714.pdf

          Reply
          • S Moderation Douglas
            S Moderation Douglas says:

            A). Biggs is not my “preferred study “. I have in the past and will in the future recommend reading this study……..thoroughly and critically……..because it has one of the clearest descriptions of some of the methodologies and, particularly they best demonstrate what is an often overlooked truism, that the lowest level public workers are (as a percentage of pay) the most *overcompensated*, and the highest educated public workers are the most *under compensated*, both in percentage of pay and in nominal dollars.

            That last statement is vital. It is echoed in most other studies, but not sufficiently stressed as it is By Biggs. Because I find their techniques in their study very informative does not mean that I agree with their bottom line.
            ……………………
            B). I prefer Center for Retirement Research 2011 paper:

            “COMPARING COMPENSATION: STATE-
            LOCAL VERSUS PRIVATE SECTOR WORKERS”
            By A. Munnell, et al.

            Their study does include state *and* local workers, and finds about an average wage penalty of 9.5% (as opposed to Biggs 12% for state only). Munnell, however, discounts Biggs estimate of 10% advantage for job security. That’s a large hunk of the “staggering” 33% public advantage. Biggs himself notes the concept of job security is very controversial, and even if the concept is conceded, the method of computation is even more questionable.

            Munnell computes pension costs differently, also, using a 6.23% rate as opposed to the risk free rates used by Biggs (something else upon which we can all agree to disagree). And somewhat different retiree health costs. The CFRR study result, bottom line, is “Given all the assumptions required,
            the best way to describe the respective compensation
            levels is roughly equal.”

            The conclusion:
            “In short, for the nation as a whole the difference
            between public and private sector compensation
            appears modest. The relatively modest differential
            should make policymakers cautious about massive
            changes without carefully studying the specifics of
            their particular situation.”

            Note, the CFRR study does not limit itself to the lowest 10% of public workers. It clearly states that virtually all serious studies show state *and* local workers earn less in cash wages than the private sector.
            ……………….
            C). Averages….averages….averages…to be continued….

          • Robert
            Robert says:

            Doug,

            Do you realize you just used a nationwide study from 2006-2010 as the basis for arguments made about specific pensions and California cities in 2013-present?

            Please heed your study’s advice: “consider the specifics of their state or locality.”

            Let’s cut Biggs estimate of job security in half, just to appease you. The average State employee has a 28% compensation boost over their private sector counterpart, much of that benefit being reflected in the topic of this article – CalPERS benefits.

            As more and more salary data on California municipalities is published, revealing how excessive their pay is, please do better than citing a nationwide aggregate study of 2006-2010 data in an attempt to deny the reality of the numbers. I’m a fan of doing apples to apples comparisons myself.

          • Robert
            Robert says:

            “Sustainability and equity are two entirely different concepts.”

            Agreed!

            I did go out on a limb and try to touch on these two separate concepts in this one article, but I’m just going to end it here on us finally agreeing.

            Have a good one.

      • S Moderation Douglas
        S Moderation Douglas says:

        ” The first step to addressing this issue is to highlight just how generous these benefits now are, which it seems we all agree on.”

        Apparently you are mistaken. We do not all agree.

        Reply
      • S Moderation Douglas
        S Moderation Douglas says:

        “This indifference to cost that accompanies the power of taxation is the primary factor why the quality of public benefits can be so high.”

        Anyone who believes there is an indifference to cost has not been paying attention or is willingly ignoring facts.

        Public employees, their unions, and even the accursed politicians are extremely cognizant of revenue restrictions. Although some obviously think it is inadequate, their have been many concessions in both salary and benefits in the last few years, and more are undoubtedly upcoming.

        Reply
        • Robert
          Robert says:

          Sigh.

          The (relative) indifference…

          Was that not obvious? Is there really a need to try and create an argument where there is none?

          Obviously, there is SOME cost restriction on public sector. But those who can tax have a substantially reduced concern with cost than those who cannot tax.

          This is tiring, I hope you will forgive me if I do not reply to as many as your comments going forward.

          Reply
          • S Moderation Douglas
            S Moderation Douglas says:

            Consider yourself forgiven.

            Relative indifference probably overestimates the influence of unions and underestimates the fiscal pressure on government from other sources.

            And overestimates the so called “free market” forces in setting private sector wages. In econ 101 and for the next three years, they hammer the concept of free markets and perfect competition, and teach the use and understanding of graphs and charts and formulas.

            In senior seminar, if you haven’t figured it out by then, they hit you with the fact that “perfect competition” is an abstract concept that does not exist in reality. “Free markets” are never really free, and graphs and charts (and damned statistics) can be made to say almost anything you want.

            Particularly in large private establishments, bureaucracy is probably more influential in setting wages than markets.

      • SeeSaw
        SeeSaw says:

        I wish I were getting such benefits, as you falsely believe that most rank and file public retirees get, Bob. My out-of-pocket ABC medical insurance premiums for me and my spouse, to pay for my former employer’s sponsored retiree health care, added in with my Medicare premiums, requires 57% of my CalPERS take-home check. My former CM, who is about 20 years younger than I, gets no less than seven times more pension benefits than I get. I have no vendetta against him similar to what these pundits have against the public sector, because they don’t get it too! My entire SS spousal benefit of $800/mo was wiped out by the GPO. I am not going to resort to cutting my throat!

        Reply
        • Robert
          Robert says:

          SeeSaw,

          I liked your apples and mangos comment above, that made me chuckle!

          I think we are likely to be in agreement for the most part. A big part of this article is pointing out that the rank and file are getting disproportionally less than the higher-earners. I receive many e-mails from CalPERS retirees who object to the idea of a $100k pension existing at all!

          I would expect most rank and file public employees would be upset at seeing how commonplace it is for those employees least in need of retirement assistance (those making $120k+ in salary) to be receiving pension benefits of this magnitude, while they receive much lower benefits.

          It is certainly not the individuals in situations like yours that are the issue. If anything, reforming the system to eliminate the excess and abuse would allow for healthier, and more sustainable, benefits for the regular retiree.

          Maybe I’m just a fool, but I really think we are ultimately on the same side!

          Reply
          • SeeSaw
            SeeSaw says:

            I would never support the idea of cutting someone else’s pension down just because it is way bigger than mine. Once you start cutting people at the top down, you have to keep chopping until you get to the bottom. PEPRA 2013 was a big pension-reform step. There is now a cap on pensionable income–and the, respective, entities could reform that even further by refusing to negotiate benefits above and beyond the CalPERS pension for their top managers. Change has to start somewhere–if wages and pensions are to be cut for new employees–consumer prices have to be cut too. Many reforms have already been made through the collective bargaining process–At my former municipal entity, the 3% at 50 pension formula for public safety was changed to 3% at 55 in 2005 and the 3% at 60 for miscellaneous workers was cut back to 2% at 60, soon after that. Then PEPRA came along and cut things back even further.

        • Jack
          Jack says:

          See Saw – depending on how long ago you retired, you may not have qualified under the generous formulas that were granted – retroactively – starting around 1999. And of course if you only worked 10 years or so in government, then you shouldn’t expect much of a pension.

          The problem with pensions are the formulas are too generous. Defenders of pensions often accuse reformers of trying to do away with defined benefits entirely. But that isn’t necessarily true. If pensions were merely downsized to something that is financially sustainable, all government employees, new and retired, could keep them. Asking for rules that make pensions fair and sustainable is not a vendetta, See Saw. It’s just common sense and basic decency.

          Reply
          • SeeSaw
            SeeSaw says:

            I would never support the idea of cutting someone else’s pension down just because it is way bigger than mine. Once you start cutting people at the top down, you have to keep chopping until you get to the bottom. PEPRA 2013 was a big pension-reform step. There is now a cap on pensionable income–and the, respective, entities could reform that even further by refusing to negotiate benefits above and beyond the CalPERS pension for their top managers. Change has to start somewhere–if wages and pensions are to be cut for new employees–consumer prices have to be cut too. Many reforms have already been made through the collective bargaining process–At my former municipal entity, the 3% at 50 pension formula for public safety was changed to 3% at 55 in 2005 and the 3% at 60 for miscellaneous workers was cut back to 2% at 60, soon after that. Then PEPRA came along and cut things back even further.

          • S Moderation Douglas
            S Moderation Douglas says:

            Jack,
            You made the presumption that all pension formulas are too generous. My pre 1999 formula was 2%@60, changed to 2%@55 in 1999, increased my pension by about 3%, which was more than offset by inflation with lack of COLAs. That formula has been reduced to 2%@62, and employee contributions have been increased to double in some cases. With the cap on pensionable income, almost all formulas are lower now than pre 1999.

            And, studies consistently show that many, if not most, public workers earn less than equivalent private sector workers even with the cost of pension and health benefits. Not that generous.

            Reduced formulas for legacy employees going forward is the biggest disagreement today, and would be tied up in the courts for years. And clearly most pension reformers are trying to eliminate defined benefits. Defined Contribution is virtually always the ultimate goal.

          • Tough Love
            Tough Love says:

            Jack, Yes, the Public Sector DB pensions “formulas” are excessive (often TWICE what is common in the few remaining Private Sector Plans still granting service/salary credit for current service.

            But it’s not just the “formulas”, it’s also the MUCH more generous Public Sector Plan “provisions”, the most costly of which are very young full (unreduced) retirement ages, and the inclusion of annual post-retirement COLA increases …. almost unheard of in PRIVATE Sector Plans.

            The first of these two makes the Public Sector Plans TYPICALLY 25% more “valuable” at retirement, and the second about 30% more valuable … and these are multiplicative (not additive) adjustments. If the Public Sector Plan “formula” alone is twice that of the Private Sector Plan, then adjusting for the incremental value of these two very typical Public Sector provision differences makes the real incremental value …… 2.00 x 1.25 x 1.30 = 3.25 times more valuable.

            And we haven’t even begun to factor in the ADDITIONAL incremental value of 99 ways CalPERS has approved to “spike” ones “pensionable compensation” and hence the pension itself.

            No matter how much those who complain that it ain’t so, Public Sector pensions are ROUTINELY 3x-4x greater in value at retirement than those of Private Sector workers making the SAME pay, retiring at the SAME age, and with the SAME years of service …. and that 3x-4x TYPICALLY rises to 4x-6x for Safety workers (with the most egregious pensions).

          • Tough Love
            Tough Love says:

            Douglas & SeeSaw….. in the interests of honestly, how come NEITHER of you found it reasonable and appropriate to even MENTION that almost none (and certainly none of a material value) apply to anyone already employed at the time the change was made effective.

            Do you thing such obvious omission of material facts make you look like a reliable source?

            Due primarily to these grossly excessive Public Sector pensions & benefit promises, CA will be insolvent LONG before any material savings come from ANY of the changes that you mentioned.

          • S Moderation Douglas
            S Moderation Douglas says:

            A Caltrans engineer has a salary approximately equal to the state average ($70,000 year.) Pre PEPRA, 5% was deducted for CalPERS contribution. PEPRA increased that to 10%. $3,500 a year… $290 a month decrease in net pay with no increase in pension. Most people would classify $3,500 a year a material value.

            And I actually did mention “Reduced formulas for legacy employees going forward is the biggest disagreement today, and would be tied up in the courts for years.”

            Perhaps you didn’t see that because I neglected to use my caps lock key.

            I am the eponymous reliable and unbiased source: S “Moderation” Douglas.

          • Tough Love
            Tough Love says:

            Douglas , Oh please, I’m sure those who have not followed these discussions in depth would have walked away thinking your noted changes applied to ALL (both new and older) workers ….. which I suspect may have been your intention ……. and your quoted statement (“Reduced formulas for legacy employees going forward is the biggest disagreement today, and would be tied up in the courts for years.”) was simply an added statement of a continued problem area (which of course it is).

          • S Moderation Douglas
            S Moderation Douglas says:

            LOL!!

            “those who have not followed these discussions in depth” would have not read past the first post.

            Or, they would be wondering why nobody is talking about safety employees. Why did you leave them out? Kind of undermines your credibility, N’est-ce pas?

      • myles
        myles says:

        Calpers isn’t sustained by taxation. It is financed by employee and employer contributions just like any other investment firm. Pensions are in trouble because of poor management decisions to defer their payments to fund their employee’s retirement. Maybe may that illegal? Why isn’t it? It’s not so dissimilar from the gas tax. Here we are paying a ton in gas taxes, but our roads still suck. Why? Because money needed to maintain them are rerouted to other priorities. The same happens with pension funding.

        Reply
        • Who wants 401k
          Who wants 401k says:

          1) SAVINGS GROWTH
          CALPERS: 7% guaranteed + COLA upon retirement
          401k: 4% + watch your savings drop 50% every 7 years until you croak and still put money in to get that.
          Realistically in the long term (and according to Warren Buffett), US stocks will get inflation + GDP growth: 2% + 2%. Nobody on wall st. can promise 7% for 50~60 years when 30 year US Treasury is 3%. This means that half of CALPERS growth will need to come from tax payers putting in extra to cover the shortfall.
          CALPERS WINS

          2) UPFRONT CONTRIBUTION
          CALPERS: 6% employee + 20% extra and NOT TAXED
          PRIVATE: $0 for 99% of companies today.
          CALPERS WINS

          3) Extra Savings
          CALPERS: 457 similar to 401k with low fees. Feds get institutional low fees lower than any 401k plan due to customer base
          PRIVATE: 401k with high fees nearling 1%

          So in net net, then CALPERS will give you $20,000 or 20% of your published salary (whichever is greater) tax free into retirement account and manage everything for you. Just have to put in the time.

          I haven’t heard of anyone wanting to ditch CALPERS and go private with 401k + SSN only because CALPERS is much better for long term employment. But now like the UAW, the baby boomers who reaped the benefit are cutting the young ones off with tiered retirement packages.

          In the end all of this even 401k, and SSN is just a pyramid scam which required every increasing population (illegal and legal immigration) when young AMERICAN families are self selecting not to have children when they can barely fund their own retirement. Land owners like most politicians just wants her husband’s commercial real estate holdings go up in price so that they can become multi millionares in addition to public pensions! Suckers Google Engineers working 70 hours with no overtime and Doctors (except prison Docs) with $500,000 in education debt!

          List of bus drivers with $200k total compensation packages.
          http://transparentcalifornia.com/salaries/search/?q=bus+operator&y=

          Reply
        • Who wants 401k
          Who wants 401k says:

          1) SAVINGS GROWTH
          CALPERS: 7% guaranteed + COLA upon retirement
          401k: 4% + watch your savings drop 50% every 7 years until you croak and still put money in to get that.
          Realistically in the long term (and according to Warren Buffett), US stocks will get inflation + GDP growth: 2% + 2%. Nobody on wall st. can promise 7% for 50~60 years when 30 year US Treasury is 3%. This means that half of CALPERS growth will need to come from tax payers putting in extra to cover the shortfall.
          CALPERS WINS

          2) UPFRONT CONTRIBUTION
          CALPERS: 6% employee + 20% extra and NOT TAXED
          PRIVATE: $0 for 99% of companies today.
          CALPERS WINS

          3) Extra Savings
          CALPERS: 457 similar to 401k with low fees. Feds get institutional low fees lower than any 401k plan due to customer base
          PRIVATE: 401k with high fees nearling 1%

          So in net net, then CALPERS will give you $20,000 or 20% of your published salary (whichever is greater) tax free into retirement account and manage everything for you. Just have to put in the time.

          Reply
        • Whowants401k
          Whowants401k says:

          1) SAVINGS GROWTH
          CALPERS: 7% guaranteed + COLA upon retirement
          401k: 4% + watch your savings drop 50% every 7 years until you croak and still put money in to get that.
          Realistically in the long term (and according to Warren Buffett), US stocks will get inflation + GDP growth: 2% + 2%. Nobody on wall st. can promise 7% for 50~60 years when 30 year US Treasury is 3%. This means that half of CALPERS growth will need to come from tax payers putting in extra to cover the shortfall.
          CALPERS WINS

          2) UPFRONT CONTRIBUTION
          CALPERS: 6% employee + 20% extra and NOT TAXED
          PRIVATE: $0 for 99% of companies today.
          CALPERS WINS

          3) Extra Savings
          CALPERS: 457 similar to 401k with low fees. Feds get institutional low fees lower than any 401k plan due to customer base
          PRIVATE: 401k with high fees nearling 1%

          So in net net, then CALPERS will give you $20,000 or 20% of your published salary (whichever is greater) tax free into retirement account and manage everything for you. Just have to put in the time.

          Reply
        • Whowants401k
          Whowants401k says:

          =SAVINGS GROWTH
          CALPERS: 7% guaranteed + COLA upon retirement
          401k: 4% + watch your savings drop 50% every 7 years until you croak and still put money in to get that.
          Realistically in the long term (and according to Warren Buffett), US stocks will get inflation + GDP growth: 2% + 2%. Nobody on wall st. can promise 7% for 50~60 years when 30 year US Treasury is 3%. This means that half of CALPERS growth will need to come from tax payers putting in extra to cover the shortfall.
          CALPERS WINS

          = UPFRONT CONTRIBUTION
          CALPERS: 6% employee + 20% extra and NOT TAXED
          PRIVATE: $0 for 99% of companies today.
          CALPERS WINS

          = Extra Savings
          CALPERS: 457 similar to 401k with low fees. Feds get institutional low fees lower than any 401k plan due to customer base
          PRIVATE: 401k with high fees nearling 1%

          So in net net, then CALPERS will give you $20,000 or 20% of your published salary (whichever is greater) tax free into retirement account and manage everything for you. Just have to put in the time.

          Reply
        • Bus Driver
          Bus Driver says:

          Even if we ignore the above outrageous benefits not offered in private sector, 8% contribution with 7% interest compounded for 30 years is only…$800,000
          But pension payouts are $70,000….which is equivalent to annuity of $1,600,000.

          Net net, bus driver contributed $8000 but state guaranteed $15,000 tax free….so that’s about 30% more than a private worker making the same $100,000 even if there exist a bus driver making that much.

          The public salaries are flawed in that they assume tenure is valuable perpetually. Compared this to an Uber driver.

          Reply
  2. SeeSaw
    SeeSaw says:

    Sorry for for the duplicate posts.

    @Jack, I was there for 40 years and 8 mos.–36.4 years service credit. I was age 72 when I retired. There are plenty public sector workers, active and retired who have common sense and basic decency. I did benefit from having my formula retroactively upgraded from 2% at 55 to 3% at 60 in 2001. Such retroactive applications were standard practice by the State Legislature all of the years of the existence of the DB pension plans in CA. All that is gone now. Let PEPRA and the Collective Bargaining process work.

    Reply
    • Tough Love
      Tough Love says:

      SeeSaw, That “standard practice” always was a theft of Taxpayer wealth …. with ZERO worker/retiree “consideration” having been given for the incremental taxpayer funds necessary to pay for the increased pensions.

      Reply
      • SeeSaw
        SeeSaw says:

        Oh, too bad, so sad, TL–what a grump you are! Of course I did not talk at the time the changes were made, about employees already on the payroll. The pension reform law had nothing to do with current employees, because those employees are protected by the CA Constitution and the Constitution of the US. regarding contracts–they were already in the plans that were effective prior to the pension reform. It was all done properly–there was no need for me to mention anything. Try as you might, you will never do anything to impinge my character, because I know who I am and you don’t.

        I should clarify for you however, there were people on the payrolls that were new after entities like mine had already started their own reforms and before the enactment of PEPRA. So that should get your blood boiling too–those employees don’t have the formulas that were enacted in 1999 and 2001, but they do still have better formulas than those that were hired after the enactment of PEPRA. Fact is, too, my entity isn’t even giving full-time jobs right now, when employees leave–they are only hiring part-timers–that ought to put a smile on your face (or I should probably say, “smirk”.)

        Reply
        • Tough Love
          Tough Love says:

          Sorry See Saw, but I disagree with Robert re your relatively modest pension (based on CA’s bloated pension formulas & provisions) which was based on ypur modest final l salary for 35+ years of service.

          You see. if you take a Private Sector worker with the SAME pay, the SAME age at retirement, and the SAME years of service, the Taxpayer paid-for share of your pension is still likely TWICE + that of the employer paid-for share of an identically situated Private Sector worker’s pension.

          It doesn’t matter that you would have struggled with a smaller pension. You deserved EQUAL to that of the comparable Private Sector work, not more. That person getting less is contributing via taxes (perhaps in a small way) to the cost of your much greater pension, unfairly lowering his/her standard of living.

          While the very high wages and corresponding very high pensions (assuming long service) attracts the most attention, CA’s egregious Public Sector pension formulas and provisions result in grossly excessive pensions at EVERY income level (as defined by what a comparably situated Private Sector worker would get) …. and THAT is the proper way to look at it.

          Reply
          • myles
            myles says:

            You’re basing this attack on nothing. Taxes don’t pay for Calpers retirement. Calpers does with its hundreds of billions of dollars in investment, paid for by employer and employee contributions. Maybe the private sector pension is less than the public sector counterpart because the private sector employee didn’t pay as much into their retirement?

            Public employees have absolutely ZERO option as to the level of funding for their own retirement. That is dictated by law. I pay somewhere along the lines of 400/month into the retirement no matter what. Even if I needed to make less a payment to take care of other priorities, I can’t. That money comes out regardless of my own needs. This is why it’s differed compensation. That money is differed until my retirement, and is used to invest in the local economy. I doubt anyone in this forum has any idea how beneficial Calpers is to the economy. It pumps many billions of dollars into the infrastructure.

            No person should suffice off only social security, but the private citizen has that option to forgo 401k planning if they choose it, and many do to their own disadvantage. This is not the case with public employees. Most 401k participating employers have matching 401k investments, which is a huge benefit that not enough take advantage of. It’s silly to compare a

          • myles
            myles says:

            It’s silly to compare the two programs. As mentioned in another post, it’s comparing apples to oranges. It’s just as ridiculous to lash out at a 401k pensioners for making more than someone who retired with only SS entitlement. anyone who saves money beyond SS will retire with significantly more than one who only contributes to SS.

  3. SeeSaw
    SeeSaw says:

    TL, you can go on continuing to be a bunch of blah, blah, because that’s what you are made of–hot air, that evaporates instantly. There is no law that pay must be the same for all workers who have the same level of education and who have the same-type job duties, whether or not they are in the public sector or the private sector. The private sector in this country produces all kinds of products and services with all kinds of prices for such and they have employees that make all levels of pay. it is the same with the pubic sector. All public workers do not make the same rates of pay, even if they have the same level of education and same type-job duties–it depends on the economic status and locale of the employer. And the same is true for the schools–all teachers do not make the same wages–it depends on where they are teaching.

    Reply
    • Tough Love
      Tough Love says:

      No SeeSaw, there is no “law” that …”pay must be the same for all workers who have the same level of education and who have the same-type job duties, whether or not they are in the public sector or the private sector.”……….. but to an intelligent person (without an “agenda” or vested interest), it does seem quite REASONABLE, especially with PRIVATE Sector Taxpayers financially responsible for the cost of excessive pension & benefit “promises” made to PUBLIC Sector workers.

      Reply
      • SeeSaw
        SeeSaw says:

        You are simply paying what the market calls for when it comes to public services TL. Why do I have to keep reminding you that the public sector workers are themselves taxpayers, equal to you in that regard. I know it might be hard for you to accept, TL, but public workers also have their own families, friends, and colleagues who support them. I think you are outnumbered–so sad, too bad, TL.

        Reply
        • Tough Love
          Tough Love says:

          Quoting SeeSaw …”What the market calls for” ???

          Hardly, more like the most your Unions and the elected officials (they have bought-off) can COLLUDE to unjustly extract from the beleaguered and betrayed taxpayers … and ALWAYS FAR FAR greater than necessary, just, fair, or affordable.

          Quoting SeeSaw … ” Why do I have to keep reminding you that the public sector workers are themselves taxpayers, equal to you in that regard.”

          Hardly, since Public Sector worker/retirees get $5-$10 BACK in taxes extracted from all Taxpayers (85% of whom work in the Private Sector) for every $1 in taxes Public Sector workers/retirees pay…. mostly to support your overstuffed pensions & benefits.

          It’s pretty obvious as evidenced by how nobody but

          (a) Welfare recipients (who like lots of services w/o paying for them) and
          (b) Public Sector workers who BENEFIT from increased taxation.. as noted above

          SUPPORT increased taxes.

          Reply
          • Myles
            Myles says:

            beleaguered and betrayed? Are you kidding me? First of all, if you’re a low income earner, you aren’t paying taxes at all. My guess you aren’t even employed. Second, Even if you ARE paying taxes, State taxes are chump change compared to Federal taxes. This isn’t about taxation my friend. This is about a bunch of crabs in a barrel who don’t like that others are better off, and want to do what they can to pull them down.

            If you did some research, you would be amazed at how damaging even a modest tax decrease is to government services, all the while if you DO happen to pay taxes, your share would go down an amount that would have zero impact on your bottom line. You’d be lucky to get a few cents back if we actually did live in a world where public pensions were paid via tax dollars, which they aren’t.

            But hey, there are rare times when the legislature pumps money into Calpers. They do the same for the private sector all the time.

            Maybe you should start your own union to demand more benefits in the private sector instead of trying to lower them for others? That’d be too much work though huh? Much easier to go on web sites and act like a “beleaguered and betrayed” tax payer. All the while playing right into politician’s tricks of distracting your from actual problems.

            Why don’t you go back to your last pay check from when you actually held a job and see how little in taxes you pay the State.

  4. SeeSaw
    SeeSaw says:

    Everyone benefits from increased taxes if they serve a good purpose, TL. Its not up to you to decide anything for the citizens of CA. You live in NJ–worry about NJ.

    Reply
  5. Mr Tapper
    Mr Tapper says:

    Quote SeeSaw: “Everyone benefits from increased taxes if they serve a good purpose,..”

    No, they don’t. No one benefits from increased taxes other than useless government employees. What one employee does in the private sector requires 4 employees in the public (government) sector. Each of those four is paid more than the one useful private sector employee and each of them thinks that he/she is a wonderful person doing an excellent job! The truth is that if any one of you had to work at a real job for a living, you would fail miserably. SeeSaw, you are simply too ignorant to know how useless you are.

    Reply
  6. Kate H
    Kate H says:

    I am a retired teacher and my husband is also retired from the Public Sector. I do believe that changes must occur. I entered the profession to make a difference, to educate and to be of service. We faced many challenges as educators, it was not easy work but still the job was rewarding and I felt that I made an impact on learning. Toward the final years of teaching, I recognized that our union, while under the disguise of protecting us, was disregarding the purpose of the profession. Our needs and more often ‘wants’ started to trump the needs of the children and it became more and more difficult to accept. The system has become more ugly since I left, the sense of entitlement with lack of regard to purpose will be the ultimate demise of public education. Looking at our own children and what they are up against in the private workforce makes me realize; compromises and changes must be made. The next generation and the ones to follow will suffer from the lack of accountability and greed that our generation has created and I feel personal accountability for being a part of this organization. We were taught, we were trained, and, I will be shunned for going against the grain. The bottom line is, we have to start taking responsibility for this mess that we have created. My husband retired before G. Davis and I retired after. My pension is almost double that of his. It doesn’t seem to make sense, how can this be? Our salaries were comparable. I watch the younger parents struggle and worry about affording to send their kids to college and think to myself, this is not what the generation before mine set up. We have lost our way, our purpose and our responsibility and all of us that belong to public employee unions are responsible. We are taught to fight for ourselves, create an image that preys on vulnerability and we buy our politicians. The images of the poor teachers and firefighters isn’t selling and the taxpayers are starting to resent us. This is not what I want to see my own children up against.

    Reply
  7. capricorn
    capricorn says:

    ……..”Further, CalPERS provides extremely generous health benefits for all of its members, regardless of income level, which are not captured in the values quoted above. Currently, these health benefits can cost up to $18,000 a year”……….

    THIS STATEMENT IS WRONG! I am a CalPERS retiree, having worked in the schools system (non-teaching) after 24 years, retiring at age 60, and DO NOT receive any health benefits through CalPERS! (I receive health benefits through my husband’s coverage.) So I wonder how many other CalPERS retirees are like me, and DO NOT receive these health benefits in our CalPERS retirement. I also do not receive Social Security.

    Reply
  8. McChalium
    McChalium says:

    Except for when I was in the Navy I have always been a private sector worker. For me there has never been a defined benefit pension plan, the best I got was a 401K. Those can evaporate in a very short measure of time as the Dot Com bust illustrated. My only option now is to leave California behind to avoid paying for the excesses of a democrat controlled state. That includes CalPers and CARB and on and on. Of course on my pension plan (SS) I don’t really get to retire. I’ll be working somewhere till I drop. At least I get one defined benefit, The VA will bury me for free when I finally do croak. Of course that doesn’t come out of Califonias budget either.

    Reply
  9. Mike
    Mike says:

    Hi,
    The tangents are exhausting. He makes, she makes, he works hard, she has to do the blah blah blah. Maybe that is the strategy. Look, public employees should make way less than the private sector. I would take the average of the city, county, state, nation or whatever the position represents, and then lock the pay scale to never exceed the average of that private sector income. At first public employees had sucky work with sucky pay, but they were guaranteed their jobs. Now they make way more, have special retirement accounts, early retirement with the option of dual incomes, pensions, better health care and a guaranteed job. How did we let our employees financially rape us? It sucks the money away from the productive members and profits the supporting members. Not a wise or efficient use of our money.

    Reply
  10. Mike
    Mike says:

    The politicians, unions, lawyers and government employees have a symbiotic stranglehold on their private sector host. An ever growing anemic relationship. Parasites have no empathy, hyenas have no remorse, and devils have no conscience. I’m not saying they are all bad, but one flea who stands aside, who warns the others they are too many and taking too much will not change the nature of fleas.

    Reply
  11. Robin Clark
    Robin Clark says:

    How do we get the State Government to cut down on these outrageous pension costs.Maybe the State should dec;lare bankruptcy
    & bargain for a lower contract.
    Robin Clark

    Reply
  12. redrosie
    redrosie says:

    When I started working for the state in the late ’80s I took a $500+ cut in pay. I was told the retirement made up the difference. It took several years to promote up the ladder. Today the starting wages for miscellaneous state workers is pretty darn good, I’m sure there’s no pay cut involved. CA law/decision makers made a huge mistake in allowing employees to test and promote up with only working 6 months in their current classification. BIG MISTAKE! Not only do you have a large number of unqualified employees, the employees are now allowed to promote to higher paying positions much faster. Eligibility for promotional exams require only 6 months in current position, unlike the two years required about 10 years ago. Another large savings to the state would be to have independent job audits. Classify positions for the actual duties performed. So many positions are classified as “analysts”, when their duties are far from analytical. Delete redundant positions. There’s so much operational waste in the state. You want to cut costs in state service? Ask the employees, not the brass.

    Reply
  13. SG
    SG says:

    CALPERS income is truly outrageous IF you live to see it and IF you are lucky enough to be outside the grip of the 20+ year old WEP/GPO provisions. Worse case is when a spouse dies leaving the widow/widower with only their remaining CALPER benefit. Social Security, if being drawn, stops immediately for the surviving spouse. Imagine your monthly retirement income going from $3526 to $1156 due to the death of a spouse and there is nothing you can do. If you’re lucky to have no mortgage, medicare will take half and you can attempt to pay your car, home, property insurance and taxes with the remainder. Can’t imagine how they pay for food.
    Adding insult to injury, if you do find a job, they begin taking social security taxes from your wages and there’s nothing you can do about it. Ironic isn’t it. You will never be able to claim social security benefits even though your spouse and you paid into that system.

    Reply
  14. Sprayer
    Sprayer says:

    CalPers is a bloated system and will eventually go belly up! fact!…it is not remotely feasible to believe people can have pensions 4-5 x greater than SS, in a single state retirement system, without it imploding, at some point, may take 20 years, but it is now beginning to show signs of distress…economists who have studied Cal Pers agree, it is on thin ice and the cracks are showing

    Reply
  15. George
    George says:

    I have been in the Private Sector, The Public Sector and served a publicly funded non-profit. I was in Human Resources for most of my working years, and designed and redesigned benefits retirement plans etc. There were so inaccuracies caused by the assumptions of the writer, but most of those have been dealt with well by others. The idea that in the end there is little difference between CalPERS and SSN is basically true- it is just that the contributions are higher, the earnings should be higher and fees lower with CalPERS than with others. A few folks commented that CalPERS is not funded by the tax payers, which when comparing to SSN is clearly true and makes sense. But as a Public Servant I try not to lose sight of the fact that my salary (some of which is deferred to CalPERS) and my employer’s pension contributions are funds from the taxpayers, As a CEO I make probably 1/3 of what I would make in the private sector. But 20% of my compensation goes to CalPERS. If you are in the private sector and get a matching contribution on your deferred compensation plan you are probably around the same. But by not being mandatory, plus paying significant fees, you end up with most people (or the average) being quite a bit lower. I also have CalPERS un reduced with SS. SO there is a fair amount of variety in CalPERS plan set ups, which has been reduced for post PEPRA members. We really should have went all in on SS, with mandatory (and higher) contributions, and some form of investments (IDK, maybe owning the public buildings and renting them back to the municipalities). Unfortunately I started late, so my 2% at 55 is great, but with only 15 years in by then that amounts to about a third of my salary, Compare that to my UPS pension of $445 per month at 55 for 10 years service it does not look too shabby.

    Reply
  16. Karl Class
    Karl Class says:

    For State government workers or retirees, the analysis misses three important facts, one – a state government employee pays 8 percent of their compensation towards PERS retirement – more than the social security contribution. two – the return on investment has been over 7 percent on combined employee and employer contributions, while someone on social security doesn’t get this kind of return. three – public employees get less than their private sector counterparts for doing the same work.

    Reply

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