California Pension Bills Are Sensible Fixes, but They Have Little Chance of Passing: New at Reason

The California Public Employees’ Retirement System’s report released last week touts all of the pension fund’s good news, which it says “has built a solid path forward for the long-term future of the fund.” But as longtime pension reporter Ed Mendel pointed out in his recent blog, the pension fund’s future is still quite troubled. Apparently, myopia reigns at CalPERS.

Consider this fact, raised by Mendel: Despite earning more than double its predicted returns during a bull market last year, CalPERS’ funding levels only increased by a blip, from 67 percent to a meager 71 percent of the funds needed to pay its future costs. Pension experts say that 50 percent funding is the likely point of no return—if a pension fund’s assets fall below that level it will be nearly impossible to ever recover to a healthy funding level.

CalPERS isn’t facing the death spiral of, say, New Jersey’s pension funds, which are funded at a frightening 31 percent. But the problem should not be taken lightly. The stock market is at record heights. If there’s a downturn—and, as Gov. Jerry Brown likes to point out, there always are downturns—local budgets, the state budget and retiree earnings could all be at risk, writes Steven Greenhut.

Read the whole thing.