pension

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A Hidden Issue in the PEB Report (In Plain Sight)

Byuclafaculty

I have been posting about the recently-released Post-Employment Benefits Task Force report. If you go to the master website where the report and related documents are available, and if you scroll way down to the bottom, you will find the dissenting minority report. It is almost lost in the clutter but you can go directly there at http://universityofcalifornia.edu/sites/ucrpfuture/files/2010/08/peb_dissenting_082510.pdf On page 6 of that dissenting report, you will find a seemingly-technical discussion entitled “Is There a Need for Risk Adjustment in the Total Remuneration Study?” Don’t mistake that section for a mere dispute among pension experts. UC has a defined-benefit (DB)…

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The Daily Californian: UC Struggles to Fill Multi-Billion Dollar Pension Deficit

Byuclafaculty

I couldn’t find any write-ups on the Post-Employment Benefits Task Force report in the press so far, including in the Daily Bruin. However, UC-Berkeley student paper does have a write-up with the graph above as part of the article. Note that the article correctly identifies the long contribution holiday as the major source of the underfunding problem. For the text, see below: The Daily Californian UC Struggles to Fill Multi-Billion Dollar Pension Deficit By Jordan Bach-Lombardo and Javier Panzar Monday, August 30, 2010 http://www.dailycal.org/article/110146/uc_struggles_to_fill_multi-billion_dollar_pension_ A decision made nearly 20 years ago to stop paying into the University of California’s pension…

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Texas Goes for the Gold as an Investment; UC Is Unlikely to Do So

Byuclafaculty

Inside Higher Ed reports that the University of Texas is investing part of its portfolio in gold, ostensibly as a hedge against inflation. It is unlikely that UC will follow that route. As the article notes, a possible explanation for the U of Texas decision is the idea favored in conservative circles – and particularly enhanced by Glenn Beck’s promotion of gold sales on Fox – that the US economy is about to experience a wave of inflation. There is in fact an indicator of what financial markets expect in the way of inflation over the next decade. The difference…

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Reflections on Two-Tier Pay Plans

Byuclafaculty

The recent majority report of the UC Post-Employment Benefits Task Force (PEB) proposes a two-tier retirement plan and makes long-term projections about the financial implication for the pension plan. (See the earlier post for the majority and minority PEB reports.) Keep in mind that two-tier pay plans have a history of instability. Such plans were introduced in the 1980s when various unions signed concessionary contracts during that era. New hires who were under such contracts were offered lesser pay and benefits than incumbents. However, pressures soon began to arise to remove the perceived inequity as the new hires become a…

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Post-Employment Benefits Task Force Report Now Available Including Academic Senate Dissent

Byuclafaculty

The long-awaited (long delayed?) Post-Employment Benefits Task Force report is now available. (See the earlier posting of a letter from President Yudof anticipating the report’s release.) The report – which is advisory to the president and regents – includes two-tier retirement options for new hires. There is also a “choice” option for current employees to enter the lower-tier (which raises some legal issues). A dissenting report by Academic Senate representatives is also included in the posting. All material can be found at http://www.universityofcalifornia.edu/news/ucrpfuture/emp_task.html

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Ongoing CalPERS Scandals Make It Tougher for UC

Byuclafaculty

UC’s pension plan has nothing to do with CalPERS. But CalPERS has had a series of scandals involving conflict of interest, bribery, and bad investments that tend to tar all public pensions in California including ours. CalPERS’ ongoing problems will complicate UC’s efforts to resolve its own pension unfunded liability. Continued unraveling of CalPERS scandals increases the chances that UC will be dragged into some statewide reform for all public pensions. The latest CalPERS scandal is reported today: CalPERS investment officer linked to bribery scandal resigns Thursday, Aug. 26, 2010, Sacramento Bee (Excerpt) A senior CalPERS investment officer resigned today…

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Letter from President Yudof regarding proposed changes to UC retirement benefits

Byuclafaculty

The following letter about the impending recommendations of the Post-Employment Benefits Task Force was emailed today. It is reproduced below for anyone who may not have received the email and to provide a continuing source of the text. Some parts have been put in bold in the reproduction below.=================== UCOP NewsSent: Thursday, August 26, 2010 11:23 AM To: UCOP-L@LISTSERV.UCOP.EDU Subject: A letter from President Yudof regarding proposed changes to UC retirement benefits Importance: High MEMBERS, UNIVERSITY OF CALIFORNIA COMMUNITY Dear Colleagues: I am writing to let you know that within the next few days, the Task Force on Post-Employment Benefits…

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Robbed Blind: Governor is Heating Up Verbal Campaign on Public Pensions

Byuclafaculty

The rhetoric around public pensions in California is heating up, as the excerpt below from a longer piece at http://blogs.kqed.org/capitalnotes/2010/08/24/budget-55-robbed-blind/#more-6347 suggests. As indicated in my previous posts on this issue, all of this rhetoric on pensions points to the need for a Regental plan for UCRS to be in place before the next governor takes over. But, of course, it matters what this plan will be. Note that the 1999 law which the governor decries below did not deal with UC’s pension. So we are potentially being pulled into a CalPERS issue. —————- Budget +55: “Robbed Blind” August 24, 2010,…

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Two Prominent Dems Join With Governor on Public Pensions

Byuclafaculty

From http://www.capitolweekly.net/article.php?xid=z2hom7ay9rt20f# The call for pension reform received an unexpected boost from an unlikely source this week — former Gov. Gray Davis. In an interview with Reuters, Davis said reforms advocated by Gov. Arnold Schwarzenegger will make it easier for whomever holds the job next, and he praised Schwarzenegger for pushing for changes in the state pension system — changes that Davis said were now inevitable. “With … the open primary and redistricting reform, at least 20% of the Legislature will have its interests properly aligned, and they will be punished [by voters] if they don’t solve big problems,” he…

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Likely Death of Public Pension Anti-Spiking Bill Will Keep Issue Alive When New Governor Arrives

Byuclafaculty

From the LA Times today at http://www.latimes.com/news/local/la-me-0818-pension-reform-20100818,0,3115924,print.story comes the word that a pension “spiking” reform bill has been watered down. The governor says he won’t sign it. Such a bill might have defused some of the tension and controversy around the public pension area – which could easily lead to a ballot initiative that would encompass UC’s pension. This development underlines the need – emphasized in prior posts – for the Regents to have a plan for UC in place by January. Note: “Spiking” refers to an ability by employees to inflate final earnings for the pension calculation by adding…