Readers respond to Sunday’s column about the state pension system resisting reform:
—Scott Thompson writes,
“Introducing the NEW California Alternative Pension System for Spikers!
“CalPERS recently thumbed its underfunded nose at the governor and legislature, saying, in effect, “We are going to continue to allow spiking, as we have been doing for many years, and we’ll continue to burden the majority of our members who don’t spike their pensions, and of course taxpayers, with the excess cost of this shamefully reckless policy.”
The state’s second-largest public pension fund, CalSTRS, at least claims to be “serious about spiking,” yet has adjusted only a handful of the many hundreds of dramatically juiced retirement accounts on its books.
“Nobody in an administrative position is willing to stop spiking, so perhaps we should finally accept that this is, as pension journalist Ed Mendel aptly puts it, “the nail that apparently can’t be hammered down.” Accept that it cannot be stopped, and opt instead to isolate it, not unlike the hemorrhage-inducing ebola virus.
“How would this work? By creating a new pension fund exclusively for those who game the existing ones. That is, anyone who wants to spike their pension, and can get away with it under current fund leadership and rules, is allowed to do so, but automatically gets moved into a spikers-only pension system immediately upon retirement.
“The new California Alternative Pension System for Spikers (CalAPSS) would be funded only by the contributions and investment earnings of its members’ accounts, and no non-spikers or taxpayers would ever be asked to subsidize it.
“It’s easy to imagine how quickly CalAPPS would, yes, collapse under the greedy weight of its grossly underfunded member accounts. And this, of course, makes it obvious why CalPERS and CalSTRS should tolerate exactly zero spiking among their members.”
Those unions don’t tolerate pension spiking; they encourage it. That’s why Gov. Brown had to restrain them with his modest Public Employees’ Pension Reform Act of 2013. Which CalPERS just undermined.