Bemoaning the CAP
Below is an excerpt from the New York Times Bay Area online edition. It points to the various times when the UC pension was overfunded but pay was frozen (or cut), the Regents diverted some pension funds to the CAP programs in lieu of cash. The CAP programs were basically like mini cash balance plans, i.e., tax deferred savings accounts with a fixed interest rate on the balance.
A little-noticed cash benefit for some University of California employees is adding strain to the system’s battered pension plan just as the university prepares for a $500 million reduction in state aid, the deepest cut in 20 years. At various points since 1992, the university has diverted about $875 million from its regular retirement fund to finance supplemental retirement benefits, in part to make up for salary cuts or meager increases tied to state budgets. But now the university system is carrying a roughly $1.3 billion obligation to more than 100,700 faculty, staff and administrators who were promised generous returns on those initial sums that the university salted away for them.
The initial goal of expanding these benefits under the so-called Capital Accumulation Payment plan was to attract and retain talented employees. But university officials acknowledged that there was no clear evidence that that aim had been achieved… If the university hadn’t offered the perk, said Steve Montiel, a spokesman for the University of California, “we would be in a little bit better financial position.”
That was a mistake, said Jason Sisney, director of state finance at the nonpartisan State Legislative Analyst’s Office… But the Board of Regents of the University of California approved the enhanced benefits on seven occasions from 1992 to 1994 and 2002 to 2003. The university set aside the equivalent of 2.5 to 5.3 percent of each employee’s salary from a given year in a separate account with a guaranteed return of 7.5 or 8.5 percent, which varied depending on when the allocation was offered.
Full article at http://www.baycitizen.org/pensions/story/generous-perk-strain-university-pension/
No use crying over spilled milk…
Non, je ne regrette rien.
C’est payé, balayé, oublié.
Je me fous du passé!
No, I don’t regret anything.
Everything is paid, swept away, forgotten.
I don’t care about the past!
