In January of this year, I posted about state pensions being in terrible financial shape. Recent news out of California reaffirms this premise.
Here’s more from BenefitsPro.com:
As CalPERS, the nation’s largest public pension, deals with a growing gap between what’s been promised and what’s been set aside, it may slash the checks of Lynch and 190 other workers by 63 percent — the rate by which the agency has fallen short.
“We were always told that it was set in stone. Now to find out that’s not true — is the sky blue? Is water wet?” Lynch, who lives in a 1994 motor home, said of her pension. “We’ve paid 100 percent of our responsibility into it. I just don’t understand how they can come along and cut so much out.”
The East San Gabriel agency would be the first to see benefits reduced by CalPERS since November’s action against the tiny city of Loyalton, illustrating what can happen to promises once viewed as sacrosanct when money runs out. Two other small California agencies may also face cutbacks, affecting five people, as Calpers pushes back against derelict governments.
CalPERS has been paying benefits at a faster pace than it brings money in.
In December, the system moved to ensure its long-term sustainability by reducing the assumed return on its investments to 7 percent from 7.5 percent. That will trigger higher annual contributions from governments, since it can’t count as much on financial-market gains to cover the obligations.