Gov. Brown - CalPERS is a Ponzt Scheme
Original post made by Arnold on Dec 2, 2011
"Well, that tells you you've got a Ponzi scheme, because you have to keep bringing in new members and the current system itself is not in a sustainable position,'' Brown said. ``I don't accept that, and we don't want to close it off anyway.''"
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on Dec 4, 2011 at 10:16 am
Quite true. The employees and agencies are supposed to put enough money in to pay for their benefits, assuming the rate of return projected in the actuarial study. If the employee stops working, or new members cease, there should be enough money to pay all the benefits. That is the definition of an actuarial sound system.
We know this is not happening so technically it is a Ponzi scheme. We taxpayers have to decide if we do something about it now, or let the pyramid continue to grow, making our problem even worse in the future and choking the system for our children. We need to first stop the pyramid from getting worse, and then figure out how to fix/pay for the problems for where we are at this point.
There are people in the union saying that the problems are not there and everything is sound because the economy will pick back up. It is easy for them to say since the employees have absolutely no risk. The risk is 100% at the taxpayers. There will never be a fair system if 100% of the risk is assigned to the employer and none to the employee. We need to change the system so 50% of the risk (at least) is assigned to the employee. As soon as the employees have some skin in it, they will want reforms. Until then, they want the status quo since it does not cost them a cent and they profit from the risk.
on Dec 5, 2011 at 8:37 am
Aren't Public Employees taxpayers too? The Public Employees I know want reform too. You talk about skin; how about the skin of crooked bankers, corporations who funnel money and jobs overseas and crooked politicians from City Council to President of the United States who line their own pockets. Take the money out of politics and these crooks go away. No money in it for them. Make a City Manager's Retirement and Executive Magt Retirement cap at 25% of the Sewer Worker even though the Sewer Worker works harder. Acosta's retirement at $202,000 is ludicrous!
on Dec 5, 2011 at 9:29 am
If the Public Employees want reform, how come we do not see any meaningful reform from them. Just look at them at the City Council meetings and they get extremely angry for just discussing pensions. I don't think the crooked bankers caused the pension crisis. They might have contributed to it but actually the unions took advantage of their crookedness. When the market was artificially high because of the schemes on wall street, the unions pushed for a higher pension saying it would not cost the taxpayers anything. They knew that once they got a higher pension, it was locked in forever, not to mention they were able to get the new pension increased retroactively to the day they started at the city. If the employees/union believe that the banks are responsibly for their pension problems, they also have to admit that they took advantage of the situation and lower their pensions to the level they were before 2000 when the pensions were dramatically increased.
I agree that the pensions at the top are ludicrous. Perhaps pensions should be capped out at $100K of salary (not pension) and if the employees want more, they can do a 457 plan. Just like social security for us. It is capped. We stop paying at a certain income level and we do not get benefits above a certain level. I would be happy if the pensions were tied to social security with respect to retirement age also. I will have to work to age 67, at least, in order to collect social security. Public Employees can retire at age 55, Public Safety at age 50. Then they also have free retirement medical FOR LIFE. Somebody retiring at age 50 or 55 is going to be receiving benefits for a real long time; at the taxpayer expense. Minimally they should not be receiving retiree medical once they qualify for medicare.