uc retirement

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The Total Comp Issue for UC and the PEB Recommendations

Byuclafaculty

In broad terms, the UC labor officials quoted in the LA Times piece excerpted below are taking the same position as the Academic Senate in the dissenters’ report on the Post-Employment Benefits Task Force recommendations. The dissenters’ report notes that all of the options under consideration: Option A (which the dissenters reject), Option B (which they might accept), and Option C (which the majority report took off the table and the dissenters want put back into consideration) represent a cut in total compensation. (Previous posts provide links and discussion of the 3 options.) On a total comp basis, UC is…

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DB for Campus Police (Only)?

Byuclafaculty

It’s unclear what the election of either gubernatorial candidate would mean for upcoming changes in the UC pension system. As previous posts have noted, UC would be well advised to have its plan in place before the new governor takes office in early January. We could end up with the defined-benefit (DB) plan only for campus police if we wait and are swept into some statewide public pension reform, according to the item below from an LA Times blog: PolitiCal blog, LA Times, Anthony York Whitman says pension-reform plans don’t apply to police, firefighters (excerpt) September 15, 2010 | 1:01…

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Majority PEB Response to Senate Dissent

Byuclafaculty

If you have followed the issues surrounding the Post-Employment Benefits Task Force report, you know there was a majority report calling for a two-tier pension and providing the Regents with Options A and B – both defined-benefit (DB) plans. The dissenters put an option C back on the table – also a DB plan. A and B were “integrated” with Social Security; C is a simpler plan that is not integrated. (Go to earlier posts on this blog for more details.) Now the majority has replied to the dissenters. You can find their reply at http://universityofcalifornia.edu/sites/ucrpfuture/files/2010/09/peb_dissenting_response_0910.pdf The response to the…

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Can a State Take Away Promised Pension Benefits?

Byuclafaculty

It has generally been accepted that accrued pension benefits promised by a state or local government cannot be reduced. That has certainly been the situation in California. Pension plans can be terminated going forward or scaled back going forward. The article excerpted below from the Wall Street Journal reports on legal tests in other states of this principle. The recent UC Post-Employment Benefits (PEB) Task Force report suggests reduced benefits for new hires (and for existing employees who choose to go into a reduced two-tier plan). It does not contemplate takeaways from retirees or from accrued benefits of current employees….

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PEB Report Continues to Get Press Coverage

Byuclafaculty

The latest news item to cover the aftermath of the Post-Employment Benefits Task Force report is in the Sacramento Bee. No mention of the faculty dissenting report, however, or the $2-for-$1 problem. UC targets pension benefits (excerpt) Sacramento Bee, Sep. 11, 2010, Laurel Rosenhall Confronting a $24 billion unfunded liability in its retirement plan, leaders of the University of California are poised to make significant changes to pension and health care benefits for the system’s retirees. The first step comes Thursday, when UC’s governing board of regents is scheduled to vote on a proposal to increase the amount current employees…

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SF Chronicle Account of PEB Report

Byuclafaculty

The news item below on the Post-Employment Benefits Task Force report is more extensive than most. It does, however, omit discussion of the $2-for-$1 problem, i.e., the fact that roughly two dollars out of three collected for the pension come from non-state sources and cannot be collected retroactively. Contentious plan for sagging UC pension fund (excerpts) Nanette Asimov, San Francisco Chronicle, September 10, 2010 A tidal wave of unfunded retirement obligations that could top $40 billion in four years is washing over the University of California, forcing employees to pay far more for those benefits and threatening students with the…

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Governor’s Press Conference on the Budget Focuses on Public Pensions

Byuclafaculty

The legislative session ended August 31 with votes on Democratic and Republican versions of the budget that were known in advance not to have sufficient votes. Two thirds is required to pass a budget although there will be a proposition on the November ballot to reduce the requirement to a simple majority. Today, the governor held a press conference. Much of it was devoted to his insistence that a budget deal cannot be reached unless there is pension reform. A link to the press conference is provided below. However, the key point for UC is that we remain in danger…

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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…