CalPERS may need bailout
SACRAMENTO, CA (KGO) -- The state's public worker pension plan may need of a taxpayer bailout. CalPERS has lost billions the past few weeks as the stock market tanked, and state and local governments may have no choice, but to pick up the bill.
"We have ups and we have downs," said Pat Macht, CalPERS Assistant Executive Officer.
The nation's largest public pension fund, the California Public Employees' Retirement System, is warning local and state entities it may need a taxpayer bailout to continue paying retirees.
With stock market losses topping $50 billion since July 1st, CalPERS is on track to needing help in just two years if the nose dive continues on Wall Street.
Local government and state retirees are guaranteed a certain amount, so the money has to be there.
"What this really is, is compensation. It's part of an employee's compensation package," said Macht.
Taxpayer groups are upset that Californians have to foot the bill when many employers have moved away from pension plans.
"This is adding insult to injury. At the same time we're seeing our own 401k's get hit, we're on the hook to make up the shortfalls for public employees who are guaranteed their full pensions without any risk," said Jon Coupal, from the Howard Jarvis Taxpayers Association.
Cities and counties also use CalPERS. Many can barely afford to keep services going, let alone contribute more to retiree benefits.
Pension costs can hurt a public agency's budget. They led to a big scandal in San Diego and helped push the city of Vallejo into bankruptcy.
Just this week, the LA Board of Supervisors learned market losses could force the county to pay an extra $500 million into its pension fund.
Lin Brady, who's been a prison guard for nearly 30 years, just signed up for pension benefits here at CalPERS.
"I think the obligation is there, that they need to make sure our pensions are supported," Lin Brady, a State Retiree.
The only way out of this is for the stock market to perform better.
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