The attack on secure retirement is, I believe, politically based and nothing to do with economics. Some facts: (note: I belong to CalPERS so I am only including facts that are associated with CalPERS. Some facts may also be pertinent to the other pension plans)
- The state contribution for about two-thirds of the workforce is the same, as a percentage of payroll, as the average during the 1980s.
- The average retiree receives $2,100 per month which can increase by no more than 2% per year, regardless of inflation.
- For every $8 received by a retiree in a pension, $6 comes from investment returns; $1 from employee contributions; $1 from the employer or taxpayer.
- The employee contribution varies between 5% and 8% of salary. The employer or State contribution varies from nothing to 21%, depending on investment returns. Over a 20 year period, the employee and employer contributions are about equal.
- Due to the downturn in the economy, the State contribution is currently 16.9%, or about $3.3 billion per year.
- PERS estimates that in future years, the State’s contribution could increase to 24% or $4.7 billion, before gradually reducing. The increase will be less than that if investments yield a higher return than projected, which has frequently been the case in the past. Current project of return I believe is around 7.5%.
- GAS asked CalPERS to bill the State an additional 1.5 billion more than necessary in order to bolster his argument that pension plan is too expensive. CalPERS rejected GAS's proposal.
of course, one or two rotten apples can spoil the whole and incidents like city of Bell and Vernon greatly damage the image of public employees and their pensions.