Public Safety Pensions Myths and Facts
August 12th, 2010
• California Employees Are Not To Blame For California's Current Financial Crisis. We Are Experiencing The Worst Economy In Our Lifetime – 80 Years. Wall Street Is To Blame For California's Current Economic Emergency.
*Public employees, including public safety, are working together to find sustainable solutions. The country is recovering from the worst economic decline since the Great Depression. It is important that we don't employ a knee-jerk reaction that will cause undue harm to the pension system. We need to work together at the bargaining table to find a manageable resolution.
• Even If The Governor Could Fire Every State Employee Under His Control – Roughly 230,000 workers– This Still Would Not Balance California's Budget. Roughly 70% Of The State General Fund Flows Out To Local Government And Schools.
• A One Size Fits All Approach Will Not Work To Solve California's Budget Problem.
*Our defined benefit pension systems were designed to be flexible and to evolve over time.Each local employer and each pension system evolves through negotiations between the employers and their employees at the local bargaining table – we need to respect the give and take.
• Retirement Issues Should Be Addressed Through Collective Bargaining, Not By A State-Imposed Mandate.
• Being A Peace Officer In California Is A Tough Job. A Secure Retirement Is Critical to California's Ability To Recruit And Retain Peace Officers.
*Last year four Oakland peace officers were killed during a routine traffic stop, this is unfortunately becoming all too common.
- California peace officers wear bullet-proof vests, carry Tasers and must be armed every day on the job. Law enforcement is not a profession for the faint-hearted.- Remember, because of the everyday dangers of the job, it is difficult to recruit peace officers.- It is not easy to become a peace officer.
*Entrance into the police academy requires passing written exams for qualifications, being grilled by an interview panel, a polygraph, and an extensive background check. Not just anyone can meet this criteria.
*The police academy includes intense physical training, similar to that of military boot camp, encompassing all aspects of the job, including physical, mental, legal and tactical skills. Cadets must also pass a rigorous physical exam before graduating.
*The academy training is 26 weeks, filled with pop quizzes and exams, quarter exams and final exams. Exams cover California law, stress management, defensive tactics and much more.
*If you pass the academy, you are assigned to a duty station and 12 weeks of field training. Officers must go through an extensive probationary period, lasting 18 months. If you fail this you lose your job.
• Peace Officers Repeatedly Give Up Higher Wages For Secure Retirement Benefits.
*Most peace officers do not receive Social Security. Many California peace officers pay into Social Security, as well as pensions, but since they receive a government pension they automatically lose part of that Social Security benefit. Therefore, some officers are contributors to Social Security, though in many cases not recipients. The other officers simply do not receive Social Security benefits upon retirement, leaving them to depend solely on their pensions.*According to CalPERS:- The average monthly retirement allowance of all CalPERS public employee retirees is $2,101.- 78% of all CalPERS public employee retirees receive less than $36,000 per year. This by no means can be considered lavish.
• PORAC Believes That Abuses In The System Should Be Curbed Without Attacking The Retirement Security Of The Majority Of Hard-Working Peace Officers.
* Less than 1 percent of all public employees receive retirements that are $100,000 or more.* PORAC believes that abuses in the system should be stopped.
Public Safety Pensions Myths and Facts
Myth #1: Public safety pensions are extremely generous and are bankrupting local governments.
Fact: Wall Street failures, corporate abuses and the burst of the housing bubble are to blame for California's struggling economy. We are witnessing the worst economy in our lifetime. Public safety members throughout California are working together, proactively offering concessions and working to help local governments manage their budgets.
The spiking you have heard about is unacceptable. The truth is, very few public employees receive pensions above $100,000; less than one percent.
Myth #2: Public safety officers are greedy and unwilling to help cities and counties out of this financial mess.
Fact: The average month of service retirement to ALL CalPERS retirees is only $2,101 per month. In fact, 78 percent of all service retirees receive $36,000 or less per year. Most law enforcement officers work on the front lines, putting their well-being in jeopardy every day. It is not an easy job or one without risk. In these days of dangerous technology and weaponry, it is increasingly difficult to find individuals willing to take those risks.
In trying to solve this problem, public safety members have been and continue to work proactively. Associations are constantly at the bargaining table, offering concessions such as deferment of pay increases, additional shared responsibility for health and retirement benefits, and even reduced special program staffing.
Myth #3: Public safety members retire young but receive the same lofty pension they would have if they worked twenty years.
Fact: The average public safety retiree is 56 years of age and has worked more than 20 years for the state of California. To receive the maximum retirement benefits, an officer has to work over 30 years. The current retirement formula encourages officers to work as long as they possibly can in order to receive the maximum retirement benefit. In reality, only 1% of public safety members actually qualify for this benefit level. Many officers struggle in dealing with their injuries as they get further along in their career.
Myth #4: Municipalities are paying more for pensions than ever before.
Fact: California's pension funds were almost fully funded until the recent stock market crash. Employer contributions to pension plans are lower today than they were in the early 1980s, and the funded status of plans is better than in the early 1980s. Between October 9, 2007 – the peak of the market – and October 9, 2008, equities declined by 42 percent. State and local defined benefit plans, which held roughly 70 percent of their assets in equities, saw a decline in the value of their equities by $1 trillion.
Myth #5: Public safety members are fortunate in that they don't pay into Social Security like other Californians do.
Fact: Many public safety members do pay into Social Security but do not receive full Social Security benefits upon retirement. This means that when an officer retires, their pension may be their sole source of income. This often leads to officers needing to find work during retirement to supplement their income.
Myth #6: Taxpayers are responsible for paying the entire cost of public employee pensions.
Fact: Pension funding comes from member contributions, employer contributions and income earned from investments. All of this combined pays for benefits and administrative expenses. When all is tallied, investment earnings on average cover almost 75% of public safety pensions.
Myth #7: Police and firefighters retire at age 50 with 90 percent of pay.
Fact: CalPERS indicates that over the last seven years, safety workers who retired at age 50 with 30 years of service represented 1 percent of all those retired. The reason very few ever receive this level of retirement pension is that they would have had to start working age 20 to earn 30 years. Most public safety members start their careers at age 27, 28, or 29. Twelve percent of all public safety members are subject to the 3 percent at age 55 formula. They would need 37.5 years of service at age 50 to get 90 percent, and would have had to start working at age 12.5. Seven percent of all public agency safety members are subject to the 2 percent at age 50 formula. They would need to have 45 years of service at age 50 to get 90 percent and would have had to start working at age 5.
Myth #8: CalPERS is unsustainable.
Fact: As a percentage of payroll, employer contribution rates are returning to the levels of the 1980s. In fiscal years 1979-80, 1980-81, 1981-82, for example, the pensions of miscellaneous state workers accounted for 19 percent of payroll.
Employer contribution rates have been very stable over the past six years; changing by less than 1 percent during the past six years, thanks to a rate-smoothing policy. The expected increase in employer rates due to the economic downturn will increase employer contributions by an average of 1 to 3.7 percent of payroll in 2011-12.