(August 28, 2012) — Democratic leaders in California have agreed on a plan to overhaul the state’s public pensions, raising new employees’ retirement ages and contribution requirements, according to Reuters.
“These reforms make fundamental changes that rein in costs and help to ensure that our public retirement system is sustainable for the long term,” Governor Jerry Brown said in a statement. “These reforms require sacrifice from public employees and represent a significant step forward.”
The package stipulates that new public employees must pay for at least half of their pensions, and grants local governments the power to raise employee contributions. Under the reformed rules, new hires will have to work an additional two years before receiving pension benefits in retirement.
“No more spiking, no more air time, no more pensions earned by convicted felons,” Brown said. “We’re cleaning up a big mess and the agreement reached with legislative leaders today is historic in its far reaching implications.”
The overhaul plan must be passed by the legislature by Friday, Aug. 31, the last day of the 2012 legislative session. Democratic leaders plan for a full state senate and assembly vote to take place on that final day.
California has the largest public debt of any state, in large part due to its fattening pension liabilities. This reform package leaves in its wake countless divisive op-eds, defensive press releases, and threatened litigation. Public funds and their investment teams, including the state employees’ and teachers’ pension systems, have been harshly criticized by the press and, in San Francisco, investigated by a civil grand jury.