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Benefits April 22, 2010
Schwarzenegger Backs CA Pension Reform Measure
April 22, 2010 (PLANSPONSOR.com) – California Governor Arnold Schwarzenegger has thrown his support behind a new state Senate measure, which backers say is estimated to save the cash-strapped state $110 billion in pension costs over 30 years.
Reported by Fred Schneyer
A news release from state Senator Dennis Hollingsworth, the bill’s sponsor, said S.B. 919 would require new state workers to remain on the job longer before being eligible for a full retirement, changes final benefit calculations to take into account the highest three years of salary instead of the highest one year, and steps up the amount workers must contribute to their own accounts.
A Bloomberg news report said the bill would require new employees to have 10 more years of service than current workers to get benefits at age 65. Police, firefighters and prison guards would have to work seven years longer before vesting.
“The current pension program is unaffordable, unsustainable and it will lead to California’s fiscal ruin. Taxpayers can no longer afford to provide state workers with pension plans that are far richer than anything comparable in the private sector,” said Hollingsworth, in the news announcement.
The governor called state worker pensions “the single biggest threat to the fiscal health of California’s future,” according to a Ventura County Star news report.
According to one recent study, California’s public retirement plans are underfunded by $536 billion.
The bill is awaiting action by the Senate Rules Committee.