California's state and local governments should roll back pensions for existing employees, dump guaranteed retirement payouts and put more of the burden for pension benefits on workers, a bipartisan watchdog commission said Thursday.
Any attempt to reduce pensions for current workers would prompt a legal battle royal. Still, the 12-member Little Hoover Commission concluded that government pension funds are in such dire financial straits that they'll never right themselves without cutting into benefits for those working now. The proposal wouldn't affect benefits drawn by current retirees.
While a couple of the council members gave lip service to pension reform during the campaign, none of them are doing anything about it now.
It's an easy problem for lazy politicians to ignore. While pension costs are currently eating up a larger share of the city budget every year, the real disaster won't hit the city for years -- well after our current council members have retired or moved on to better things.
Since reducing pensions for the next generation of employees won't cut costs in the near term, the commission recommended the Legislature pass a measure that lets state and local governments freeze the pensions of current workers and move them into a less costly hybrid system.
For example, a 20-year government employee planning to retire in 10 years at age 63 with 2.5 percent of salary for each year of service would keep the money built up under that formula.
But once the pension is frozen, the employee would move into a three-legged program that keeps a much smaller guaranteed pension, a professionally managed 401(k)-style savings account and Social Security benefits.
Ha! 2.5% at 63! How quaint! Encinitas gives its employees 2.7% at 55!
This pension freeze is exactly the right way to go. Current employees are not entitled to continue earning outrageous pensions for the entire rest of their career just because they happened to get hired before city leaders came to their senses.