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CalPERS Update: Earnings and Health Benefit Plans

Posted: 7/19/2018 Tags: benefits pension retirement Tags Views: 945

CalPERS has reported a preliminary 8.6 percent net investment return for the 12-month period that ended June 30, 2018. This is the second year in a row that earnings have exceeded the long-term assumed rate of return, which is 7.25% for the current fiscal year. With assets of more than $351 billion, CalPERS overall funded status rose three percentage points to an estimated 71 percent.

CalPERS has also concluded negotiations with health plan providers for 2019. Overall rates will increase 1.16 percent with members in Basic Health Maintenance Organization (HMO) plans seeing an average increase of 0.37 percent and members in Preferred Provider Organization (PPO) plans will see an overall average increase of 2.83 percent. While these are averages, some plans have significant increases (22.96% for Anthem HMO Traditional and 19.80% for PERSCare PPO) and some plans have significant decreases (-25.56% for PERSSelect PPO). Over the objections of ACSS and other state employee advocates, HealthNet will be leaving the Sacramento market in 2019 and Blue Shield Access+ will exit from eight Bay Area counties in 2019.

Because of the wide variances in rates and changes in plan availability, it will be particularly important to evaluate your options during this year's Open Enrollment period from September 10 to October 5.  CalHR will soon release the "CoBen Allowance" for 2019 which is the state employer contribution for health, dental and vision for the 2019 calendar year. Prior to Open Enrollment, CalHR will update the "Benefits Calculator" on the CalHR webpage which allows comparisons of out-of-pocket costs depending on health benefit selections. ACSS will provide the CoBen Allowance amount for 2019 and a link to the Benefits Calculator when it is available.


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May Revision of the Budget: Continue Saving for the Future as Surplus Grows

Posted: 5/16/2018 Tags: benefits budget legislation pension policy retirement salary Tags Views: 1189

Governor Jerry Brown released his May Revise of the Budget on May 11th, 2018. ACSS Legislative Advocate Ted Toppin provides relevant analysis and insight of the May Revise that may be of interest to managers, supervisors and other excluded state employees:

“The state continues to generate revenue at unprecedented levels and now it is coming in faster. In January, the surplus was predicted to be $6 billion. The surplus now is expected to be $9 billion.

The May Revise proposes saving for the future. In January, the Governor proposed to put an additional $4.4 billion into the state rainy day fund, topping it out at $13.8 billion – the constitutional limit. In the May Revise, he socks another $3.3 billion into a different reserve account.

Budget negotiations between the Administration and the Legislature will now heat up. The Governor will urge restraint. Legislators of both parties will push for billions of dollars in additional spending. Ultimately, you can expect the Governor to agree to modest increased spending while keeping his rainy day reserves. Regardless, the Legislature will pass a budget by June 15 and the Governor will sign it by June 30.

Here’s what the May Revise says about issues important to ACSS members:

State Employee Compensation

The January budget proposal included $1.2 billion ($589.5 million General Fund) for:

  • increased employee compensation
  • health care costs for active state employees
  • retiree health care prefunding for active employees

The May Revise decreases this amount by $8.1 million to reflect:

  • corrections to 2019 health rates
  • natural changes to enrollment in health and dental plan
  • updated employment information for salary increases
  • updated employment information for salary increases
  • revised pay increases for judges
  • updated costs related to the salary survey estimates for the California Highway Patrol (Bargaining Unit 5)

State CalPERS Contribution

The state’s contribution – $6.2 billion – to CalPERS is down slightly ($18 million) from the January estimate. The decline in the revise is mainly driven by:

  • CalPERS’ higher than expected investment return in 2016-17
  • the benefit of the state’s additional $6 billion pension payment in 2017-18
  • higher than projected enrollment of members under the Public Employees' Pension Reform Act of 2013, who have lower benefit formulas

Overall, pension reforms are beginning to reduce costs. The May Revise proposes no additional pension reforms.

State Health Care/Retiree Health Care

The May Revise makes no changes to the expected costs of providing state employees and state retirees health care.

State Employee Position Increases

The May Revise also reports that there is expected to be an additional 3,878 position in state government next year for a total of 210,767 in FY 2018-19.”

The Governor’s complete budget summary and draft budget can be found here: www.ebudget.ca.gov.


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California Supreme Court to Review a Trio of Pension Cases

Posted: 4/26/2018 Tags: benefits legislation legislature pension policy retirement Tags Views: 1413

Protecting your pension and retirement benefits is a core principle for ACSS. Three cases pending before the State Supreme Court raise questions regarding the validity of the long standing “California Rule.” Since 1955, the courts have held under the California Rule that once pension benefits are granted to a public employee, they are vested and cannot be modified for the duration of an employee’s career.

>> Read more...


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Cast Your VOTE! Miller Will Protect YOUR Pension.

Posted: 9/23/2017 Tags: benefits election pension retirement Tags Views: 849

Hurry! Monday October 2 is the last day you can cast your vote in the CalPERS election. ACSS encourages you to support David Miller for CalPERS Board Member At Large, Position A. Miller is committed to putting the interests of CalPERS members first. Miller has spent 25 years as a union member, union leader and a founder of Californians for Retirement Security, the broad coalition formed in 2005 to fight against non-stop attacks on public employees and our pensions. With integrity and commitment, Miller will stand up to ensure the system is always there to provide retirement security for each and every employee and retiree.

Click here to vote online NOW! Miller needs YOUR support to help protect pensions and ensure the best interests for all excluded employees.


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Governor Brown's "Push Me Pull Me" May Revision of the Budget

Posted: 5/12/2017 Tags: budget legislation pension policy salary Tags Views: 1883

Governor Jerry Brown released his May Revise of the Budget on May 11th, 2017. Here, ACSS Legislative Advocate Ted Toppin provides relevant analysis and insight of the May Revise that may be of interest to managers, supervisors and other excluded state employees:

"With the Governor’s release of his May Budget revision yesterday, it was hard not feel as if you were being pushed and pulled in opposite directions. On the one hand, the Governor again highlighted the largest threats to the budget:

  • Recession. Our economic expansion is the third longest in California history and a “recession at some point is inevitable.”
  • Federal Funding Cuts. The federal government is contemplating “actions that could send the state budget into turmoil.”

In his remarks the Governor went so far as to say “make no doubt about it, cuts are coming in the next few years, and they’ll be big.”

On the other hand, the May revise reports revenues are higher than expected in January and proposes new spending:

  • January revenue projections were $5.8 billion short of what was expected. The May revise reports projected revenues have improved by $2.5 billion since then.
  • The May revise proposes new spending on K-12 school ($1.4 billion), county IHSS services ($400 million), and continuing state funded childcare ($500 million).

Reducing CalPERS State Pension Liabilities. Perhaps the most important and interesting May revise proposal for state supervisors and managers (indeed all state employees and retirees) was the Governor’s proposal to make an immediate infusion of an additional $6 billion supplemental payment to CalPERS. The money will come as a loan from the Surplus Money Investment Fund. If it works as expected, it really is a clever and innovative approach to reducing the unfunded CalPERS liability for state employees.

According to the May revise “this action effectively doubles the state’s annual payment and will mitigate the impact of increasing pension contributions due to the state’s large unfunded liabilities and the CalPERS Board’s recent action to lower its assumed investment rate of return from 7.5 percent to 7 percent.” After the transfer, the $6 billion will be expected to earn a 7 percent return from CalPERS, compared to the less than 1 percent currently earned from SMIF. Over the next two decades, this supplemental payment will save the state an estimated $11 billion in payments to CalPERS and lower the annual contribution to the fund by an average of 2.1 percent of payroll. The costs associated with the payment will be repaid with Proposition 2’s (rainy day fund) dedicated revenues for long term liabilities.

This proposal and the others in the May revise will now go through review by state legislative budget subcommittees leading up to the state budget approval deadline – June 15. Here is the Governor’s press release from yesterday with a link to the full May revise."


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CalPERS Expects 5.8 Percent Annual Investment Return, Significantly Lower than the 7 Percent Goal

Posted: 2/10/2017 Tags: benefits legislation pension policy retirement Tags Views: 1194

On February 7, 2017, CalPers announced they anticipate a 5.8 percent annual investment return. In our article from December 2016, ACSS provided information about CalPers lowering the discount rate from 7.5 percent to 7.0 percent. CalPERS predicts this lower estimate of 5.8 percent could reduce the portfolio’s more volatile stock and private equity sectors and increase allocations of more stable investments. CalPERS expects higher investment returns in the decades to follow.

Don Boyd, fiscal studies director at the Rockefeller Institute of Government, says “It requires a rosy view of the future to assume a long-run return on 7 percent while expecting to earn only a 5.8 percent in the first 10 years. But the alternative would require raising government contributions by even more than they have increased already, undoubtedly an unpopular and difficult move.”

>> Read the full article from Reuters here.


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Pensions in the News

Posted: 11/4/2016 Tags: benefits pension retirement Tags Views: 1667

ACSS fights to protect your pension and to provide members with relevant news for excluded state employees in regards to pension protection. Below are some informative and insightful recent publications that report on the current pension protection issue in California:

Jerry Brown touted his pension reforms as a game-changer. But they’ve done little to rein in costs
(October 28, 2016 - LA Times)

Generous pensions: Will the courts give government a way out?
(October 30, 2016 - San Jose Mercury News)

Marin ‘pension spiking’ appeal draws national attention
(October 30, 2016 - Marin Independent Journal)


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Additional Updates for Salary and Pay Adjustments for Excluded Employees

Posted: 10/7/2016 Tags: benefits legislation pension representation retirement salary Tags Views: 14464

BU02 Retirement Contribution

On September 30, 2016, CalHR released PML-025 in regards to Retirement Contribution Increases for Excluded Employees Affiliated with Bargaining Unit 2.

>> Click here to read more...

Pay increases and adjustments - BU07

On October 5, 2016, Cal HR released Pay Letter 16-18 regarding pay increases for excluded employees associated with Bargaining Unit 7 (Protective Services and Public Safety):

>> Click here to read more...

Prefunding Implementation M06 and S06

On October 6, 2016, CalHR released PML-027 in regards to Other Post Employment Benefits (OPEB) Prefunding Implementation.

>> Click here to read more...


ACSS will continue to follow up and advocate for additional special salary adjustments on behalf of excluded employees related to all other bargaining units across the state.


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Prefunding Retirement Benefit Contributions – Implementation for S06, M06 and other Excluded Employees


On August 26, 2016, ACSS met with CalHR to discuss Other Post Employment Benefit (OPEB) Prefunding for supervisors and managers tied to Bargaining Unit 6 (Peace Officers).

Below are the important issues that were discussed at the meeting:

  • Excluded Employee General Salary Increases
  • Other Post Employment Benefit (OPEB) Prefunding Implementation
  • Processing Prefunding Deductions
  • Delaying Prefunding
  • Retirement Health Benefits and Vesting for New Employees

  >> Click here to read the full text of the article.


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“California Rule” Continues to Protect Pensions Despite Marin County Court Ruling

Posted: 9/2/2016 Tags: benefits pension retirement Tags Views: 1336

ACSS strives to provide members with news that matters to excluded state employees. We are on your side and fight to protect your pension and retirement benefits. The “California Rule”, created in 1955, prohibits any changes in pension benefits to state workers once they are granted. However, on August 17, 2016, a state appellate court in San Francisco concluded that the California Rule can be modified. In the case of Marin Association of Public Employees vs Marin County Employees Retirement Association, the issue of “pension spiking” (the practice of using tactical means to inflate income and benefits) opened the door to debate the validity of the long-standing California Rule.

In this case, three appellate justices determined that state employee pensions are “not an immutable entitlement.” And added that “the Legislature may, prior to the employee’s retirement, alter the formula, thereby reducing the anticipated pension…so long as the…modifications do not deprive the employee of reasonable pension.”

Pension reformers may see this ruling as a reason to continue to propose new pension reform measures.

ACSS fights to protect your pension. In fighting this battle, we joined the Californians for Retirement Security Coalition (CRS) which aims to protect pensions and retirement benefits of public employees. Steven Maviglio, spokesperson for CRS, reassures ACSS that the California Rule is not going anywhere anytime soon. Maviglio reiterates that “The California Supreme Court has repeatedly affirmed the “California Rule”, protecting pensions and maintaining that they are a vested right”. He goes on to mention that the case of Marin County is based on an unreasonable, narrow set of facts and may be appealed to the Supreme Court. Ultimately, Maviglio says “There is no reasonable conclusion that this decision opens the door to overturning the California Rule. Any significant changes would require legislative action, which will not occur this year.”

ACSS will continue to closely monitor this issue and provide you with updates.


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