Overcoming the Defined Benefit Pension Assault: Lessons From California

Transcription

1 Overcoming the Defined Benefit Pension Assault: Lessons From California presented by William Pryor Los Angeles County Employee Retirement Association Trustee Vice President Los Angeles County Firefighters Local 1014 Executive Board Member National Conference of Public Employee Retirement Systems. (NCPERS) British Columbia Federation of Labor Pension Forum Vancouver, B.C Dec. 1, 2005

2 History of California Public Employee Pension Assaults Former CA Governor Pete Wilson pension fund grab and Proposition s: The boom years and California public employee retirement enhancements : The economic bubble bursts.

3 Public Employee Retirement Security in California Strength of California s pension systems. 1. Most systems are strong. LACERA is well a well funded plan covering 88,000 active and 45,000 retired employees. Safety and General employees of Los Angeles County. 2. Few systems have major problems. Some exceptions made popular by the press. 3. Issues are external and not the fault of the pension systems.

4 Why California? California is a big market for private pension providers. Corporate governance rankles business. Public pension plans in California are active in corporate governance. CalPERS/STERS, LACERA Success in California fuels the national privatization movement. Arnold factor.

5 Initial Pension Privatization Proposals Core Principles: 1. Prohibit any newly hired non-federal public employee in CA from enrolling in a DB plan beginning , thereby eliminating, among other things, the disability and death benefits otherwise inherent in a DB plan and afforded to injured workers or their survivors. 2. Require any public employee hired on or after that date to enroll only in a DC plan. 3. Maintain DB plan for existing employees, but provide limited opportunity for those employees to convert to DC plan. 4. CalPERS, CalSTRS, and LACERA alone identified increased employer costs of roughly $8 billion over the next 10 years to operate their respective two-tiered structures under these proposals.

6 Schwarzenegger s Year of Reform -Translation: A barrage of shameless assaults targeting working Californians and their families. -Decides to include DC retirement legislation authored by Assemblyman Keith Richman and the DC ballot initiative submitted by the Howard Jarvis Taxpayers Association as part of his overall reform package. Enter Arnold

7 California Families Against Privatizing Retirement Formed in response to the DC legislation authored by Richman, a Republican Assemblyman from Northridge, CA who is also running for State Treasurer in Broad coalition that includes both labor and management organizations, among others. Firefighters produced a short video detailing Richman s unfair, mean-spirited and unnecessary legislation.

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9 Chasing Arnold

10 Firefighters, Teachers & Nurses Fight Back!

11 Led by firefighters, teachers and school employees, public employee organizations come together to form a coalition in response to the antiworker ballot initiatives supported by the Governor, including the DC pension measure. OBJECTIVE: Stop Arnold s statewide special election power grab on November 8th. Coalition produces television and radio ads demonstrating that Schwarzenegger is not the Governor he led voters to believe he was going to be.

12 Governor Retreats on Pensions Temporarily Fatal flaw: Eliminating death and disability benefits for public safety survivors. Coordinated response: rallies; news media; letters-to-the-editor; legislative action. Schwarzenegger publicly withdraws but, more a month after doing so, his web site still urged support for the DC pension scheme. When he made his tactical withdrawal, he also made a promise: He d Be Back after our hard-earned retirements in 2006.

13 Issue Hasn t Gone Away Since the Governor retreated earlier this year: -Privatization advocates haven t given up. -Arnold continued to raise unprecedented amounts of money through the November special election from his big corporate allies to help advance his anti-worker agenda. -Meanwhile, the Governor s office attempted to develop an alternative pension proposal, but pretty much left legislative leadership out of that process. -Senate & Assembly Democrats, having been kept out of negotiations with the Governor, unveiled their respective reform packages before recessing for the year. The measures failed to make it to the Governor s desk in 2005 and will be awaiting lawmakers when they return in January In the interim, Assemblyman Richman introduced a handful of new, anti-worker pension proposals.

14 Educating the Membership

15 Senate & Assembly Democrats Take Common Sense Approach Democrats proposals recognized that eliminating guaranteed pensions for firefighters, teachers and other public employees wasn t the answer and wouldn't save a penny. They took a common sense approach to the issue, outlining potential improvements to existing systems, rather than the extreme approach of a costly $70 million special election on proposals that were half baked, poorly drafted and flawed. They acknowledged the importance of putting forth proposals that provided for retirement stability and predictability for both employers and employees, without eliminating guaranteed retirement benefits.

16 Step One A Sweep on Nov. 8th Defeating Arnold: In a stunning rebuke of the governor and his powerhungry agenda, voters said NO to all four of the governor s reform initiatives, including Proposition 75 (Paycheck Deception) and Proposition 76 (Budget Power Grab).

17 Now What? For his part, Schwarzenegger refused to concede defeat even as vote tallies showed he was in for a long night on Nov. 8th. His unwillingness to offer even a hint of an apology for putting voters through the ordeal of an unnecessary special election did not pass unnoticed in the aftermath of the election. He now turns his attention to his 2006 gubernatorial reelection effort.

18 Step Two Beat Back the Looming Pension Attack! Focus groups and extensive polling demonstrate that the numbers are not strong for retirement privatization. Schwarzenegger is now seen by voters as a partisan politician, rather than simply a movie star. Media is increasingly more critical of the Governor s reform agenda.

19 Richman s Latest Proposal Even Worse than Before ACA 23 - Like his previous pension privatization attempts, Richman s latest scheme contains a number of the same dangerous provisions, the more egregious include: Constitutionally outlaw defined benefit (DB) retirement plans for all state and local firefighters effective in favor of risky defined contribution (DC) and hybrid retirement schemes; Eliminate specific provisions that otherwise provide for secured, defined death benefits for the survivors of firefighters killed in the line of duty.

20 ACA 23 (Continued) Constitutionally increase the normal retirement age for firefighters from age 50 to age 55; Constitutionally take away retiree health care for those firefighters who have not yet reached age 55; Constitutionally eliminate the single-highest year standard in favor of a 36-month average when calculating a firefighter s final compensation for retirement purposes; ACA 23 will be considered by CA lawmakers when they return to Sacramento in January. Stay tuned California s public employee pension saga continues!