California’s Public Employees Retirement System, CalPERS, is routinely projecting unrealistic earnings on its investments.
When their investments generate low yields, “state and local governments are being told to cough up more in contributions,” writes the SacBee’s Dan Walters, “and they must either swallow the increases or persuade their employees to pay more. It’s not a coincidence that sharply increasing pension fund demands play large roles in the recent financial struggles of Stockton and San Bernardino.”
What incentive does CalPERS have to make unrealistic projections?
“Were CalPERS and other pension funds to lower their earnings projections to more realistic levels,” Walters writes, “unfunded liabilities would grow even larger and increase political pressure for more money or for significant pension reforms.”
In other words, CalPERS is cooking the projections to cover up that public employees costs are too high, and will require stressed cities to pay more and more. I wish this city had the wherewithal to cut city employee pensions and fight CalPERS all the way up to the Supreme Court.