California Public Employees' Retirement System officials have rebutted my recent column in which I point out the following irony: CalPERS insists on a 7.75 percent rate of return when taxpayer funds are at risk, but uses only a 3.8 percent rate of return when using its own funds to buy out localities that leave the system. But my friend Jack Dean of Pension Tsunami wonders whether the CalPERS letter is a refutation or a validation of my view. Writes the CalPERS official:
"Nothing could be further from the truth. Our terminated agency pool of assets is the investment umbrella for public employers that have opted out or been eliminated from the active pension program. These terminated agency plans no longer receive employer or member contributions, and are no longer accepting new members, but we must still maintain funds to pay pensions of existing members."
The funds used to pay off terminated agencies must, in other words, pay their own way without subsidies from other contributors and taxpayers. What am I missing here?
"Nothing could be further from the truth. Our terminated agency pool of assets is the investment umbrella for public employers that have opted out or been eliminated from the active pension program. These terminated agency plans no longer receive employer or member contributions, and are no longer accepting new members, but we must still maintain funds to pay pensions of existing members."
The funds used to pay off terminated agencies must, in other words, pay their own way without subsidies from other contributors and taxpayers. What am I missing here?
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