CalPERS Staff Recommend Increasing Rates in FY 2016-2017
On Wednesday, CalPERS staff members issued a report urging the pension fund's board to raise contribution rates beginning in fiscal year 2016-2017 to account for retirees' longer life spans and to phase in the increases over five years, the Sacramento Bee reports (Kasler, Sacramento Bee, 2/12).
In December 2013, CalPERS staff recommended considering new demographics when setting contribution rates for fiscal year 2016-2017. Last week, Gov. Jerry Brown (D) sent a letter to the CalPERS board urging members to immediately account for retirees' longer life expectancies and phase in over three years the costs associating with the longer life spans (California Healthline, 2/6).
Brown said a plan that delays increasing contribution rates until 2016 would be "unacceptable" (Sacramento Bee, 2/12). He added, "No one likes to pay more for pensions, but ignoring their true costs for two more years will only burden the system and cost more in the long run" (California Healthline, 2/6).
Details of CalPERS Staff Report
The new CalPERS staff report acknowledged Brown's letter, noting that current CalPERS policy allows members to "pay more in contributions than the minimum contribution rate set each year."
The CalPERS board is expected to vote Tuesday on the recommendation. If approved, the change would take affect for local governments in 2015 and state and school districts in 2016.
In response, Brown in a statement said, "The board has the legal authority and moral responsibility when the facts warrant. And the facts certainly warrant prompt action -- now" (Sacramento Bee, 2/12).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.