California’s Pension Change — A Cap on Pensions

Thoughts, Blue Jersey? 12mileseastofTrenton’s already started off a discussion. Promoted by Rosi.

I started this diary to promote discussion about California’s AB340, passed in 2012, that changed California’s pension system.  It didn’t solve the whole problem but achieved important financial savings.

One of the main elements was a cap on the pensionable income.  The cap would be at the same level as Social Security.  So for now, it would be $110,000.  In other words, a worker would only accrue a pension based on their average income unto $110,000.  So in effect, if they earn a 50% pension (based on 25 years service), they would receive $55,000 a year.

Such a cap would preserve current pensions for low and middle-income workers but reduce pensions for upper-class workers, for whom pensions are not as necessary.

I know, I know: there are a lot of $110,000+ workers in NJ who are doing important jobs and $110,000 isn’t much in New Jersey.  But the same can be said of California.  But we have to find savings somewhere.

Comments (10)

  1. 12mileseastofTrenton

    Of course, you could acheive the same result by increasing contributions.

    Reply
  2. firstamend07

    change is needed and all viewpoint should be heard

    Reply
  3. BuonNatale2u

    I am open to this idea. I would also like to see the law include rules against  “pension padding”.

    Then again, lawmakers only seem to make laws that take more and more money away from the workers who worked for years and who had pension and benefits promised to them which are now in jeopardy through no fault of their own. The lawmakers never seem to want to make laws to stop ones who are truly stealing from the pension fund, examples:

    -Pension Padders

    -Double Dippers

    -States who borrow from the pensions to balance a budget then never pay the $$$ back

    – Pay-to-play violations, such as where donators of CC get millions of pension monies that they then put into high risk / high fee funds to line their pockets and bring little, if any, money back to the fund

    Just think of the billions of dollars that would be in the pension system now if laws were made to make those 4 issues above illegal. Then after that, if the pension is still in trouble, going to the workers again for more money would be fair. I am sure workers and unions would even support paying higher contributions if their contributions were not being used to replace money originally stolen from them.

    Reply
  4. honestNJdem

    The state actually tried something like this but only for new employees it’s the Deferred Compensation Plan which caps the salary that is pension eligible for certain employees.  

    http://www.state.nj.us/treasur

    Currently, it’s listed for 2014 to be $117,000 which I feel is still rather high.  The biggest problem NJ faces in the pension system, well 2nd biggest since the largest is the failure to the state to make payments.  Is things like double dipping, and that all new rules still grandfather in so many employees especially in tight economic times that doesn’t change the curve.

    Changes to new employees don’t have an impact in the long term problems the pension system faces.  Another way to handle the problem would be to adjust payments over time. For instance the life expectancy of an individual at the time the pension was conceived was considerably low. Why not cap out the defined benefit portion for the next 30 years and tier it down after that?

    Reply
  5. firstamend07

    http://www.northjersey.com/new

    I assume that the CWA leadership, which always is slow to think and react on behalf of its members, is still ” reviewing their options”. They talk the talk, but seldom walk the walk.

    Well at least the troopers( and possibly the NJEA today) are going to court to defend their members.

    Reply

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