Myths and Facts about Retirement Security
Those attacking the retirement security of public servants make a lot of sensational claims about the state of our public retirement system. Many simply don't stand up.
MYTH: "Public employee benefits are bankrupting state and local government."
FACT: The economic meltdown and Wall Street greed is the primary cause of the fiscal woes. Most of the increased employer costs to CalPERS are attributable to the same corporate greed that hit everyone's retirement. Employee benefits make up a small piece of the problem.
MYTH: "Cutting benefits will help us fix our budget mess."
FACT: Reducing pensions won't do anything to close the budget gap. It is settled law that only new employees can have their pensions cut. Any imagined savings would take decades to appear. Moreover, if we got rid of all pensions, California would still be $16 billion in the hole.
MYTH: "Public employee pensions are too generous."
FACT: California is only slightly above the national average. The average retirement check in California is about $24,000 a year. Unlike the private sector, many public employees do not pay into Social Security, and do not receive Social Security benefits.
MYTH: "What about all those six-figure retirement payouts?"
FACT: The vast majority of large pension payouts go to management. Less than 1% of CalPERS pensions exceed six figures, almost all of them going to senior executives and management. Indeed, the highest retirement benefit currently paid goes to a discredited Vernon city manager.
MYTH: "Public employee union contracts are to blame for out-of-control pension costs."
FACT: Management is getting the big retirement dollars, not union members. The vast majority of massive retirement payouts go to people who are not. Also, firefighters have foregone literally billions in raises in order to secure their retirement.
MYTH: "During tough economic times, unions should give in on pensions."
FACT: Employees are doing their part, and are ready to do more. Throughout California, firefighters and other unions are negotiating concessions at the bargaining table ... pay freezes, furloughs, sometimes even pay cuts. Employees are stepping up to the plate ... it's the politicians that are playing games.
MYTH: "Taxpayers shouldn't have to bear the entire burden of paying generous benefits."
FACT: The burden is already shared. Roughly two-thirds of the funding for CalPERS comes from investment income. Less than a quarter from taxpayers. And employees pay their fair share - in the case of public safety, up to 9% of salary.
MYTH: "The private sector is abandoning traditional pension plans as being too expensive, and the public sector should do the same."
FACT: Abandoning pension fattens corporate bottom lines, not workers' retirement. Privatizing retirement has left millions without any retirement security, while corporate salaries have skyrocketed. It's time every employee had the right to a secure pension ... public and private sector.
MYTH: "Retirement curbs will mean more money for schools, roads and health care."
FACT: No impact on budgets for as long as 20 years. Pension cuts won't save a dollar in the current budget, and there is no guarantee that any future savings would help schools. Eliminating or cutting back public employee retirement will depress economic growth, and put more people at risk of being without secure pension or health care.
MYTH: "Money paid into employee pension system benefits only the employees, not taxpayers."
FACT: California's economy benefits from pension fund investment. Approximately $35 billion is pumped into the state's economy by pension investment -- $7 of economic payback for every $1 of investment. And every dollar spent by a retiree produces $2 worth of economic activity. Taxpayers also benefit from high-quality workers who choose public service because of the retirement security.
The bottom line:
California's firefighters and public employees are stepping up to the plate in these hard times. But they should not be forced to trade away their hard-earned retirement security. Everyone deserves a secure retirement.