Edward Ring

Director, Water and Energy Policy

March 10, 2017

What is the Average Pension for a Retired Government Worker in California?

SUMMARY

The average full career (30 years work) pension for a retired public employee in California was $68,673 in 2015, not including benefits. This is in comparison to the average pay (not including benefits) for an active full-time worker in the private sector in California, which in 2015 was $54,326, and to the maximum Social Security Benefit for a high wage earner retiring at age 66, which in 2015 was $32,244. Put another way, the average public employee retiree with 30 years of service collects a pension (not including benefits) that is 26% greater than the average pay for a non-retired full time private sector worker, and more than twice the maximum Social Security benefit.

There is ongoing public debate over the financial sustainability of public sector pensions. In California, significant work has already been done to evaluate how required contributions fluctuate according to market conditions, and incremental progress has begun towards reforms to improve the resiliency of the system. At the same time, while there is a great deal of anecdotal reporting on how much of a pension benefit, on average, California’s state and local workers can expect to receive when they retire, there remains substantial disagreement over the accurate number. This study is focused on that specific question.

In order to arrive at an accurate calculation, this study analyzed 23 of the largest pension systems in California, representing 95% of all state and local government retirees. In order to determine a “full-career” pension, we produced results using two assumptions, (1) the average of all post-2000 retirees with 30+ years of service, and (2) the average of all post-2000 retirees with between 29.5 and 30.5 years of service. The summary findings to follow use the assumptions in the 2nd example, which are invariably lower than the first. For reasons we state in our assumptions section, we believe these calculations are somewhat lower than what is truly representative of a full-career pension, and therefore can be relied on to not at all overstate the amounts.

For all systems evaluated, representing over 1.0 million records of California’s retired state and local government workers, in 2015 the average pension for a post-2000 retiree with between 29.5 and 30.5 years of work was $68,673. This does not include benefits.

Using the same criteria – the average full-career pension for a CalPERS retiree was $71,402, for a CalSTRS retiree it was $57,715, and for a University of California retiree it was $61,752.

There was a great deal of variation in the major independent county pension systems, with the highest full-career average in 2015 going Contra Costa County, at $85,091, and the lowest going to Tulare County, at $51,932.

To compare public safety pensions to pensions for all other employees, we evaluated data from three cities where each city has two independent pension systems, one for public safety, and another for all other employees. The 2015 results summarize as follows:

Los Angeles – public safety $89,183, all other retirees $54,782,
San Jose – public safety $130,439, all other retirees $74,649,
Fresno – public safety $54,860, all other retirees $40,927

Another way to compare public safety pensions to pensions for all other employees was to evaluate data from pension systems that reported, for each record, the former employing agency. Los Angeles County provided data that included this information. Los Angeles County was also the only major pension system to provide benefits data, yielding the following summary:

All retirees – pension $65,027, benefits $13,471, total $78,497
Sheriffs – pension $88,144, benefits $18,395, total $106,539
Firefighters – pension $104,905, benefits $20,350, total $125,256
All other retirees – pension $50,484, benefits $10,581, total $61,065

Data on disability pensions was available from two major pensions systems: In Los Angeles County in 2015, disability pensions were reported for 6.5% of former miscellaneous employees, for 40.5% of all retired former sheriffs, and 65.7% of all retired former firefighters; in San Jose’s retirement system whose participants are exclusively former public safety employees, 50.0% of the retirees were receiving disability pensions.

It is our hope that simply contributing this baseline information on average pension amounts, reported with a high degree of accuracy, will further the discussion of what constitutes a financially sustainable and politically equitable level of retirement security for California’s public servants.

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INTRODUCTION

This report calculates the average pension for California’s state and local government retirees. Unlike most analyses, especially those produced by representatives or advocates for the pension funds, this report examines the best data available to calculate average pensions based on years of service. This report is intended as a comprehensive update to several analyses produced over the past several years, in particular “How Much Do CalPERS Retirees Really Make?” (February 2014) and “How Much Do CalSTRS Retirees Really Make? (March 2014).

The scope of this study is restricted to providing the most accurate assessment of average pension payments to retired state and local public employees in California. To perform this analysis we relied primarily on data compiled by Transparent California, an online database sourced via public information act requests to pension systems. Using spreadsheets downloaded from this website, we were able to get usable data from 23 of the largest pension systems in California. In all we evaluated 1,135,653 individual payroll records.

Sorting Pension Averages by Years of Service

One major misconception concerning pension benefits regards just how much a state or local worker may expect to collect in their retirement. The primary source of this misconception is based a need to better explain the concept of a “full career” pension. For example, CalPERS, on their “myths vs. facts” webpage, makes the following claim: “Myth: Public pension benefits are excessive… Fact: The average CalPERS pension is about $31,500 per year.” CalPERS is probably making an accurate statement, but they are not taking into account the average retiree’s length of service. Someone who works half of a normal career should not expect a pension equal to someone who has worked a full career. As will be seen, the actual average based on a 30 year career is well in excess of twice that amount.

In order to properly evaluate pensions based on length of service, all of the 23 plans we evaluated disclosed how many years each individual retiree worked. There were only six major independent plans we could not evaluate. Five of them reported data to Transparent California, but did not report years worked; the San Diego County Employees’ Retirement Association (SDCERA) with 15,113 participants in 2015, the Alameda County Pension with 7,814 participants, the San Mateo County Pension with 4,111 participants, the San Diego City Employees’ Retirement System with 6,799 participants, and the Fresno County Pension with 6,911 participants. Lastly, we could not evaluate the Los Angeles Dept. of Water and Power Pension System, with an estimated 10,000 participants, because they have not provided any data at all.

Differentiating the “Enhanced Pensions”

In addition to length of service, which must be considered when evaluating the true value of a lifetime pension, another important distinction we noted was the disparity between pensions awarded recently and those awarded a generation ago. The principal cause of this disparity were the pension benefit enhancements which were enacted between 1999 and 2005 by the pension systems, starting with the California Highway Patrol via Senate Bill 400 in 1999.

The SB 400 enhancement increased the pension formula as follows: Previously, CHP retirees would earn a pension equivalent to 2% times they number of years they worked, times their final annual salary. So if a CHP officer had worked 30 years and retired at a final salary of $100,000, their pension would be calculated as 30 years times 2.0% times $100,000, which equals $60,000 per year. SB 400 raised this “multiplier” to 3.0%, which meant the new CHP pension, using the same other variables, would be 30 years times 3.0% times $100,000, which equals $90,000 per year. This benefit enhancement was enacted retroactively, meaning that a CHP officer retiring in 1999, using the same variables, would get a $60,000 per year lifetime annual pension, whereas one retiring in 2000 would get a $90,000 annual pension. The significance of this change is reflected in the average pensions all state and local government retirees receive, and to illustrate this, we have not only calculated the overall average pension, but have differentiated between the average pensions for those who retired prior to 2000, and those who have retired in 2000 and since then.

It’s important to note that these more recent retiree averages are the ones that matter, since funding these more costly pensions is the burden that taxpayers currently face, and collecting these larger pensions is what all currently employed state and local workers expect.

Public Safety Pensions

Another important distinction which we have tried to make is between public safety pensions and pensions for all other workers. Unfortunately it is difficult to get good data on this unless either (1) there are pension systems that are exclusively for public safety employees or exclusively for other employees, or (2) if there are pension systems whose records clearly indicate whether or not a retiree’s former employer was a public safety agency or not. While the largest pension system, CalPERS, and most others, do not provide this information, fortunately some major pension systems do. For example, three cities, San Jose, Los Angeles, and Fresno, each have two independent pension systems, one for their public safety employees and one for everyone else. And in one notable case, Los Angeles County, the data clearly allows an analyst to differentiate between average pensions for their public safety employees as distinct from the averages for their other employees.

Disability Pensions – One area where very little good data was available concerned disability pensions, because very few of the independent systems provided information on their retirees who were under disability status. It is important to call attention to this category of retiree, because state and local retirees who are classified as disabled receive significant tax breaks. In some cases they are permitted to exclude up to 50% of their pension from income tax liability. For this reason, it is important for the public to have confidence that these disability exclusions are based on genuine need. We do have disability statistics from two major pension systems, the public safety retirement plans for San Jose and Los Angeles. We will report our findings on these two plans but believe the importance of this issue may merit work in subsequent studies.

Other Post-Employment Benefits

Similarly, an area where very little good data is available is with respect to benefits. This is regrettable, because in some of the cases where the information included benefits data – typically payments to retirees for health insurance – the amount of these benefits averaged in excess of $10,000 per year. We will report our findings here, but also believe this is an area that merits additional research.

Assumptions

It is necessary to reveal some of the assumptions we were required to make as well as some of the sources of possible inaccuracies in this analysis. First, in most cases we could not use all the data. While all 23 systems we analyzed provided data for years of service and year of retirement, in nearly all cases there was a small percentage of records where this information was not provided. Because these percentages were not large, usually in the range of five percent or less, we simply excluded them from the dataset used to calculate averages. In many cases the missing year of retirement data was replaced by the term “beneficiaries,” meaning the original retiree was deceased and a survivor was collecting the pension. Based on the small percentage of records with missing data, and the assumption that the missing records were randomly distributed within the range of pension amounts, retirement years, and years of service, we believe excluding this small percentage of records does not affect the averages we have calculated.

Also, we believe minor inaccuracies were introduced into our calculated averages based on two factors. First, we included 2015 retirees in the dataset, despite the fact that some retirees may have only left their employment, in the middle of 2015, in which case their pension would have been only half of their annual entitlement. We measured the impact of leaving these records in vs. taking them out and found the difference to be slight enough – less than one-half of one percent – to value keeping the larger sample size even though it caused the average pension calculation to come in lower. Another factor which is impossible to measure but which undoubtedly also caused our average pension calculations to come in lower than what is truly representative is based on part-time career employees whose final pension calculation was based on only a fraction of what a full-time employee would have earned. For example, a substitute teacher who worked a few weeks per year for 30 years would be included in our dataset, affecting the average for retirees with 30 years of service, even though their pension may only be a few thousand dollars. Both of these sources of inaccuracies, if it were possible to correct them, would result in the averages we have calculated to be higher, not lower, so we do not think they affect the veracity of our findings.

One final consideration. Previous attempts to stratify pension averages by years of service have provided results within a range that is arguably too broad. For example, we have reported pension averages for less than 20 years of service, 20-25 years of service, 25-30 years of service, and 30+ years of service A valid criticism of this method is that it might attempt to imply that the average for 30+ years of service is how much a retiree can expect after working 30 years, when retirees who may have worked 40 years are also in that sample. To avoid this concern, we do provide these conventional ranges in this study, but add another layer of analysis. Because the dataset is so big, with over 1.1 million records, we can review narrower ranges of service years while still having adequate sample sizes. To that end we have isolated three groups of retirees; those who worked between 19.5 and 20.5 years, those who worked between 24.5 and 25.5 years, and those who worked between 29.5 and 30.5 years. By doing this we believe we can assert with confidence that these averages truly represent what someone who worked 20, 25, and 30 years, no more and no less, can expect to earn as an annual pension.

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AVERAGE PENSION PAID TO CALIFORNIA’S STATE/LOCAL GOVERNMENT RETIREES

The tables to follow all use the same basic format. All numbers represent the average pension received for retirees in each subset.

Data for every pension system is represented in three standard rows. Row one shows averages for pensioners who retired before 2000. Row two shows averages for those who retired during 2000 or afterwards. In row three (“avg all ret years”), the average pension is shown for all retirees regardless of their retirement year (rows one and two combined).

The columns depict average pensions based on years of service. Column one (“0 – 100) shows the average pension regardless of years worked, i.e., all retirees. There are two variations to these tables that have been prepared for all of the pension systems. Tables 1-A, 2-A, 3-A, and so on, show average pensions by a range of service years. Column two (“0-20”) shows averages for workers who retired after working 20 years or less. Column three (“20-25) shows averages for workers who retired after working more than 20 years but no more than 25 years. Column four (“25-30”) shows averages for workers who retired after working more than 25 years but no more than 30 years. Column five (“30-100”) shows averages for workers who retired after working more than 30 years.

Average Pensions Based on Data from 23 Major Systems

Table 1-A reports pension averages using data from all 23 pension systems we analyzed. We estimate that these 23 pension systems represents 94% of all of California’s state and local government retirees. As a result, we believe these calculations are very accurate. As discussed in the preceding paragraphs, Table 1-A is formatted to report pension averages sorted according to when pensioners retired (rows) and also according to how many years pensioners worked (columns).

Two numbers stand out in this and all of the subsequent tables, and are highlighted in yellow. The first highlighted result, to the left, shows that the average pension for a typical retired state or local worker in California is $38,101. This average is for all retirees, regardless of how many years they worked, or when they retired. The first two averages in column one differ significantly, again showing the impact of SB 400 on retiree pension benefits. The top number, $28,527, is the average for all pensioners who retired before 12/31/1999. The middle number, $41,757, shows the average for all pensioners who retired after 1/01/2000. While SB 400 had a significant impact on this disparity, another contributing factor is the rate at which end-of-career wages escalated faster than the rate of inflation over the past 20 years. Less of a factor is inflation eroding the value of the pre-2000 retirees’ pensions, since most pension benefits include automatic annual cost-of-living adjustments that nearly keep pace with inflation and in some years exceed it.

The second number on this and all of the subsequent tables that is highlighted, to the right, depicts the average pension for retirees who left the workforce after 1/01/2000 and worked 30 years or more. We believe this is a more representative average because it reflects the pension benefit formulas available to active workers today, and because it reflects what an active worker can expect to collect as a pension if they work for a full career. The average, $73,009, is very nearly twice the $38,101, which is frequently cited as the “average” pension California’s state and local workers receive.

Table 1-A

Average Pension – Consolidated Records from 23 Major Systems

(by range of service years, entire database)

The next table, below, offers a variation in the column format common to not only this Table 1-B, but also 2-B, 3-B, and so on. This version is created in order to more precisely report the average pension based on an exact number of years of service. Because over one million records were analyzed, even these narrow slices of data from the retiree population still yield reliable results. As can be seen, Table 1-B reports the average pension for retirees who worked between 19.5 and 20.5 years (column one), between 24.5 and 25.5 years (column two), and between 29.5 and 30.5 years (column three).

In this table, again, two cells are highlighted. The first one, to the left, shows the same average as in Table 1-A, $38,101 for all retirees, regardless of when they retired or how long they worked. The second highlighted cell, to the right, show s the average pension for retirees who worked just about exactly 30 years. The purpose of this format is to avoid any possibility of reporting misleading averages. For example, in Table 1-A, the data includes people who not only worked 30 years, but people who worked in some cases 40 years or more. Retirees in Table 1-A who retired after 1/01/2000 with 30-plus years of service had an average pension of $73,009, whereas the retirees in Table 1-B who retired after 1/01/2000 with exactly 30 years of service had an average pension of $68,673.

As will be seen, there is considerable variation between average pensions based on what system a retiree belongs to, and whether or not a retiree was a member of public safety or any other non public safety employee. But if one number should be represented as the average full career pension for a state or local government retiree in California, it is this one – $68,673 per year in 2015.

Table 1-B

Average Pension – Consolidated Records from 23 Major Systems

(by exact years-of-service; 20, 25, 30 – applicable portions of database)

Average Pensions in the Three Statewide Systems – CalPERS, CalSTRS, and the University of California

By far the largest public employee pension systems in California are CalPERS, reporting 625,135 retirees in 2015, and CalSTRS, reporting 260,892 retirees for that year. The University of California’s pension system is actually fourth in size, their 49,515 retirees in 2014 (data for 2015 was unavailable) trails the retiree count for Los Angeles County where they reported 60,613 retirees in 2015.

Because CalPERS has by far the largest population of active retirees, it should come as no surprise that the average pension is close to the average we calculated for all 23 major pension systems combined. CalPERS manages pensions for over 3,000 state and local government entities in California, with their largest employer being support personnel (teachers belong to CalSTRS) in LA Unified School District, followed by the County of Santa Clara, and only then their largest state employer, the Employment Development Dept., followed by the California Highway Patrol.

Similarly, CalSTRS manages pensions for nearly 1,500 public education entities, with the retired LA Unified School District teachers their largest cohort. The data inTables 2-A and 2-B show these pension averages based on ranges of years-of-service (2-A), and specific lengths of service (2-B). Once again, the most salient data present in these tables is highlighted in yellow – with the highlighted cells in the far left column showing the averages that are commonly reported to the press, and the highlighted cells in the far right column showing the averages that are most representative of employees who worked a full career. As can be seen in Table 2-A, the average pension for retirees with 30+ years of service who retired after 1/01/2000 was $67,889 for CalPERS, $76,200 for CalSTRS retirees, and $71,433 for University of California retirees.

Table 2-A

Average Pension – Statewide Systems: CalPERS, CalSTRS, and the UC System

(by range of service years, entire database)

Table 2-B, again, is provided in order to forestall any criticism of these “full-career” calculations being misleading. In this table the yellow highlighted cells in the far right column do not refer to averages calculated for retirees since 2000 who worked 30 years or more, but rather for those retirees who worked almost exactly 30 years. Only retirees with between 29.5 and 30.5 years of service are included in these calculations.

As can be seen, the surprising result for CalPERS employees is that when the calculation is limited to retirees between 29.5 and 30.5 years of service, the average, at $71,402, is actually higher than the average for retirees with years of service ranging from 30 years to the maximum amount recorded. We rechecked this very carefully. This is obviously counter-intuitive since a pool of data that includes retirees with 40 years of service or more should not yield a lower average pension calculation than one that is restricted to retirees who only worked 30 years, since if anything (there are ceilings on on how much an employee can accrue) the longer you work, the larger your pension gets.

There are several possible reasons for this, including that CalPERS retirees include a larger than average proportion of retirees who worked 30+ years, but worked part-time and therefore accrued a relatively small pension based on a full, but part-time career. This possible explanation is supported by the fact that CalPERS employers include hundreds of small agencies where there is a high percentage of part-time employees. In any case, it is important to make one main point: The average pension reported for full-career CalPERS retirees with 30 years of service is at least $67,889, if not more. That calculation is definitely not misrepresenting the data.

Table 2-B

Average Pension – The Big Three: CalPERS, CalSTRS, and the UC System

(by exact years-of-service; 20, 25, 30 – applicable portions of database)

Average Pensions in the Major Independent County Systems

The next two tables display average pensions for the largest 14 independent county pension systems, ranging from Los Angeles County, 3rd largest overall with 60,613 retirees reported in 2015, to Tulare County with 2,925 retirees in 2015. One clear conclusion from reviewing this large body of data is the tremendous range in average pension benefits. On Table 3-A, as highlighted in yellow in the far right column, the highest average full career pension for employees who retired after 1/01/2000 with 30+ years of service is Ventura County at $97,945. The 2nd highest average full career pension is Contra Costa at $90,592, followed by San Bernardino – a county with a history of serious financial challenges – at $89,571.

The lowest average full-career pension among these top 14 counties is Tulare, at $60,918, followed by Stanislaus at $67,200 and Fresno at $68,112. The county of Los Angeles, with by far the largest pension system, is roughly in the middle of the pack in terms of their average full career pension, at $81,605.

Table 3-A

Average Pension – Major Independent County Systems

(by range of service years, entire database)

The data on Table 3-B calculates pension averages for the 14 major independent county pension systems based on specific years of service, with the highlighted cells on the far right showing the average pension for post 1/01/2000 retirees with between 29.5 and 30.5 years of service. Predictably, these averages which exclude retirees with far more than 30 years of service are usually lower than those reported on Table 3-A. But not always.

For example, Los Angeles reports post 2000 retirees with 30+ years of service at $76080 (Table 3-A) vs. post 2000 retirees with exactly 30 years of service at a much lower $65,027. By contrast, San Francisco’s post-2000 with 30+ years of service retirees on Table 3-A average 81,605, vs. a higher average for exactly 30 years on Table 3-B at $84,473.

Regardless of how the data is evaluated, whether using ranges of years of service (the “A” tables), or a one year band to calculate averages for a very specific length of service (the “B” tables), there is great variation in the averages between the different independent systems. On Table 3-B, the lowest average for a post-2000, 30 years of service pension is Tulare, at $51,932. The highest is Contra Costa County, at $85,091.

Table 3-B

Average Pension – Major Independent County Systems

(by exact years-of-service; 20, 25, 30 – applicable portions of database)

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AVERAGE PUBLIC SAFETY EMPLOYEE PENSIONS

When calculating averages for most pension systems, it is difficult if not impossible to isolate the retirees who were public safety employees from the retirees who were so-called “miscellaneous” employees. But in California, four large cities have two independent pension systems, one for their public safety employees and one for their miscellaneous employees. Tables 4-A and 4-B display the averages for these three cities, comparing the averages for public safety retirees to the averages for miscellaneous retirees.

As can be seen on Table 4-A (ref. highlighted cells in far right column), there is both tremendous variation in full-career pension amounts between these three cities. Miscellaneous employee pensions range from a low of $41,792 in Fresno, to $64,973 in Los Angeles, to $75,236 in San Jose. Public Safety pensions also vary considerably between the three cities, with Fresno averaging $73,016, Los Angeles averaging $98,495, and San Jose averaging $132,752.

Table 4-A

Average Pension – Comparing Separate Systems for Safety vs. Misc Employees

(by range of service years, entire database)

As can be seen on Table 4-B which focuses on retirees who worked exactly 30 years (ref. highlighted cells in far right column), again there is both tremendous variation in full-career pension amounts between these three cities. Miscellaneous employee pensions range from a low of $40,927 in Fresno, to $54,782 in Los Angeles, to $74,649 in San Jose. Public Safety pensions also vary considerably between the three cities, with Fresno averaging $54,860, Los Angeles averaging $89,183, and San Jose averaging $130,439.

Table 4-B

Average Pension – Comparing Separate Systems for Safety vs. Misc Employees

(by exact years-of-service; 20, 25, 30 – applicable portions of database)

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OTHER POST-EMPLOYMENT BENEFITS (“OPEB”)

The primary source of retirement benefits apart from pensions is supplemental retirement health insurance. Because cities and counties have more flexibility in awarding or reducing employer paid retirement health insurance compared to pensions, there is even more variation between systems in the level of benefits provided. Moreover, it is harder to acquire data on OPEB. Only four of the 23 systems analyzed here including that information in their disclosures to Transparent California. In the case of Fresno County, while they reported 97% of the retirees receiving pensions also received benefit payments, the average annual benefit they reported for a retiree was only $646 per year. Another county that provided benefits information was Santa Barbara, but they only reported 19% of the retirees receiving pensions also receiving benefit payments.

One of the best sources of data on OPEB is Los Angeles County. The data they provided also offers excellent comparisons between public safety and miscellaneous employee retirement benefits.

Table 5-A shows pensions, benefits (OPEB), and total retirement averages (pensions plus OPEB) for four groups. The first section shows these averages for all Los Angeles County retirees. As highlighted in the far right column, the average pension for a Los Angeles County retiree who retired after 1/01/2000 with 30+ years of service is $76,000. They collect, on average, $11,993 in OPEB benefits, meaning their total retirement package in 2015 was $88,074.

The next three sections of Table 5-A show the same data, pensions, benefits, and total retirement averages, but each is limited to a particular subset of retirees; former sheriffs, former firefighters, and all other retirees. As can be seen, there is a stark contrast between the benefits collected by former members of public safety and those collected by all other retirees. As shown highlighted in yellow in the lower right of each section, retired Los Angeles County sheriffs with 30+ years of service who retired after 1/01/2000 collected a retirement package (pension plus benefits) that averaged $119,136 in 2015. Firefighters collected, on average, $140,879 in 2015, and miscellaneous (all other) retirees collected $76,037.

Table 5-A

Average Pension & Benefits – Los Angeles County – Public Safety Compared to Misc. Retirees

(by range of service years, entire database)

The next table, as done throughout this report, shows the average pensions for retirees based on a very specific period of service. This eliminates the potentially misleading results based on calculating averages on 30+ years of service, since those averages are skewed upwards by the presence of records for workers who may have worked 40 or more years.

As it is the averages for Los Angeles County retirees are significantly lower when using a service range of 29.5 – 30.5 years instead of 30+ years. As can be seen, the average retirement package for someone with between 29.5 and 30.5 years of service who retired after 1/01/2000 is $78,497 for all retirees, $106,539 for former sheriffs, $125,256 for former firefighters, and $61,065 for all other retirees.

With respect to health care, it is clear that at least in some cases – Los Angeles County being a prime example – they add substantially to the value of an employee’s average retirement benefit. Referring again to Table 5-B, the average payments for benefits in 2015 for someone with between 29.5 and 30.5 years of service who retired after 1/01/2000 is $13,471 for all retirees (17.2%), $18,395 for former sheriffs (17.3%), $20,350 for former firefighters (16.2%), and $10,581 for all other retirees (17.3). In all cases, these benefits added about 17% to the value of the average Los Angeles County retiree’s total retirement package in 2015.

Table 5-B

Average Pension & Benefits – Los Angeles County – Public Safety Compared to Misc. Retirees

(by exact years-of-service; 20, 25, 30 – applicable portions of database)

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DISABILITY PENSIONS

Information on pensions for retirees who have job related disabilities is even scarcer than information on other post employment benefits. Only four pension systems provided data to Transparent California; Ventura County, Contra Costa County, Los Angeles County, and the City of San Jose. It must be noted that this information can be acquired through public records acts to specific agencies, and determining the extent of disability pensions would be a public service. While that exercise was beyond the scope of this report, here is what we learned:

In Ventura County, disability status was reported for 15.0% of all retiree pensions (public safety and miscellaneous – the data didn’t include information on former employing agencies). In Contra Costa County, disability status was reported for 10.4% of all retiree pensions – like Ventura County, Contra Costa did not differentiate between public safety and miscellaneous, nor did they reveal former employing agencies.

Better data was found for Los Angeles County, where even though a single system manages benefits for both public safety and miscellaneous employees, they have reported the former employing agencies. As a result, we were able to calculate the percent of retirees on disability according to their former employing agencies, and the results are startling.

To provide full disclosure, we could not analyze 14,805 of the 60,614 pension records reported by Los Angeles County for 2015 because those records did not include “years of service.” Without that variable present we could not produce averages based on years of service. Nonetheless, because we had 45,809 intact records to work with, 76% of all retirees, we believe the averages we’ve presented thus far, and the percentages we’re about to present, are reasonably accurate.

In Los Angeles County in 2015, disability pensions were reported for 6.5% of former miscellaneous employees, for 40.5% of all retired former sheriffs, and 65.7% of all retired former firefighters. These are astonishing percentages. As an aside, of the 7,120 disability pensions reported, not including benefits, 1,645 of them, or 23.1%, were over $100,000.

The City of San Jose’s Police and Fire Pension System, which did not provide benefits data or former employer (in this case either police or fire) data, nonetheless reported which retirees were receiving disability pensions in 2015. The data was consistent with what was reported by Los Angeles County for their public safety retirees, in San Jose, 50.0% of the retirees were receiving disability pensions, and 15.1% of those pensions were over $100,000.

Without having better data from more pensions systems, it is not possible to extrapolate these results. But for two very large independent pension systems for which we do have data, Los Angeles and San Jose, we find that 40% or more of all public safety retirees do so on disability.

CONCLUSIONS AND RECOMMENDATIONS

The scope of this study was limited to investigating and reporting the average pensions for full-career employment in California’s state and local governments. Through the entire study we focused on two numbers – the average pension for all employees regardless of length of service or year of retirement (highlighted in yellow in the far left column of all of the tables), and the average pension for employees sorted by their length of service and by whether they retired before or after 1/01/2000. Because pension benefits were enhanced, retroactively for all active workers, starting around the year 2000, we believe that post-2000 averages are more representative of what California’s current state and local government workforce can expect.

To that limited scope, we added one twist, which was to provide a parallel set of tables (the “B” tables) that offered averages for retirees whose length of service was almost exactly 20, 25, or 30 years. To do that, we restricted the records used to calculate averages to those retirees whose length of service was between 19.5 and 20.5 years, between 24.5 and 25.5 years, and between 29.5 and 30.5 years. Because of the size of the datasets we used, over 1.0 million retiree records, we are confident the averages are accurate.

Accordingly, the conclusions we report here are all for post-2000 retirees with between 29.5 and 30.5 years of service. Apart from the contention that working 30 years might only constitute a “full career” in the public sector, we believe these averages are as accurate as possible.

Summary of Findings

Using the same criteria – the average full-career pension for a CalPERS retiree was $71,402, for a CalSTRS retiree it was $57,715, and for a University of California retiree it was $61,752.

Los Angeles – public safety $89,183, all other retirees $54,782,
San Jose – public safety $130,439, all other retirees $74,649,
Fresno – public safety $54,860, all other retirees $40,927

All retirees – pension $65,027 benefits $13,471, total $78,497
Sheriffs – pension $88,144 benefits $18,395, total $106,539
Firefighters – pension $104,905 benefits $20,350, total $125,256
All other retirees – pension $50,484 benefits $10,581 total $61,065

Observations

The purpose of this report is to provide a comprehensive reference for anyone who wants to know, using available data, what California’s state and local government workers receive in pensions if they work for 30 years. By reporting on average pensions sorted an exact service period (19.5 – 20.5 years, 24.5 – 25.5 years, and 29.5 – 30.5 years), comparing that to averages sorted by ranges of service years (<20, 20-25, 25-30, 30+), and by sorting based on pre-2000 and post-2000 retirees, we offer information that is accurate and avoids misleading assumptions or inaccurate simplification.

For example, CalPERS on their “Myths vs. Facts” page states “The average CalPERS pension is about $31,500 per year.” This is a profoundly misleading statement. As can be seen on Table 2-B in the CalPERS section, the yellow highlighted cell in the far left column corroborates CalPERS – our 2015 data showed an “average” pension of $32,678. But that average was for all retirees regardless of if they retired before benefits were enhanced, and regardless of how many years they worked. On that same table, highlighted in the far right column, it can be seen that a more accurate average, based on 30 years work and retirement after 2000, is more than twice what CalPERS claims, $71,402. It should go without saying that if someone does not work a “full career,” they should not expect the amount of their pension to be based on a full career of service.

Several additional points should be made. We assume that 30 years is a “full-career,” but why? After all, a typical American worker who enrolls in Social Security can expect to work well over 40 years, from, say, age 26 through age 65, before they are eligible for the full Social Security benefit. And to put these pensions in perspective, the maximum Social Security benefit for someone retiring on their 66th birthday is $32,244. As shown on Table 1-B, across all 23 pension systems that we analyzed, the average pension for a retiree with 30 years of service is $68,673, more than twice as much.

Much of the discussion surrounding pensions has focused on their financial sustainability. While this is a question of vital importance, too often overlooked is the moral question of whether pensions are simply too generous when compared to government retirement programs for private sector workers, regardless of their affordability. There is a compelling case to be made that if the government is going to offer citizens programs like Social Security, or pensions for government workers, then perhaps all citizens should have the opportunity to select from the same set of benefit formulas and incentives.

Recommendations

This report raises more questions than it answers, even when restricted to the question of just how much our public servants are, on average, receiving in retirement benefits for a full career of service. Towards answering these questions, our recommendations focus on how government agencies and citizen groups can create more transparency.

In all of these transparency recommendations, what is needed are individual records, not aggregate data. This way, analysts can develop average and median calculations based on examining all unique records, using whatever sort criteria they want to apply. Sentiments are understandably mixed on whether or not the names of pension recipients should be included with this individual data, and this report is neutral on that issue. The State Controller, for example, compiles individual pay records for active state and local government employees, and these records include a great deal of detailed individual information from which various and useful aggregate calculations can be made, even though they do not provide individual names.

At a minimum, individual pension records should disclose the following:

(1) Amount of pension, years-of-service, year of retirement,

(2) Amount of benefit payments such as retirement health care premiums paid by former employer,

(3) Disclosure if reported pension amount included one-time amounts such as DROP payments,

(4) Disclosure if recipient is designated as receiving a disability pension,

(5) Disclosure of how many years-of-service are the result of purchased “air-time.”

(6) If the recipient is a beneficiary, retain information about original retiree and provide the year deceased.

The following disclosures would be helpful if feasible:

(7) If other supplemental payments are made, disclose all of them.

(8) Disclose if the recipient is also a participant in Social Security as part of their government retirement benefit package.

(9) Disclose if the recipient also has a defined contribution account as part of their government retirement benefit package.

(10) Disclose whether the recipient gets a 2nd or 3rd pension payment from other pension systems, or whether the recipient was still actively employed while collecting their pension.

* * *

Ed Ring is the vice president of policy research for the California Policy Center.

Edward Ring

What is the Average Pension for a Retired Government Worker in California?

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