Background Material on Californias Pension Debate
|The battle to protect your retirement security has begun in Sacramento.
Under the guise of reform, politicians at the Capitol led by Governor Arnold Schwarzenegger have introduced proposals to privatize the pension system that helps secure the retirement of Californias first responders and their families.
Under the governors two-tiered retirement plan, your newly hired brothers and sisters would be forced into a private, 401k-style system with a capped contribution rate. The plan guarantees boatloads for Wall Street, but provides no guarantees for you and your family.
Californias current pension system CalPERS for instance is known as a defined benefit (DB) system. Under this, you put in your hard work saving lives, and youre guaranteed a pension ... period. But under the governors privatized plan a defined contribution system, you and your employer make separate contributions (with rates capped at 4%), and then youve got to fend for yourselves.
In addition to all the skills youve developed as first responders, apparently now you have to learn how to be stock speculators, too.
CPF believes the current defined benefit plan is essential to recruiting and retaining the highest caliber of individual for our profession. It could chase our best and most experienced firefighters into the private sector. That means a lower standard of service to the taxpayers. Worse, those who stay wont retire when the time is right for them theyll retire when the time is right in the stock market.