tag:blogger.com,1999:blog-8236405782975490260.post901025206919364495..comments2024-03-20T22:55:32.772-07:00Comments on Valley Economy: How Much Would Capping Pensions Help Stockton?Jeffhttp://www.blogger.com/profile/10344751623916759400noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-8236405782975490260.post-50777609888314191622013-10-09T09:23:29.796-07:002013-10-09T09:23:29.796-07:00Yes, without drilling into the numbers, I suspect ...Yes, without drilling into the numbers, I suspect you are correct that “caps and claws” would have a small effect. And I know there is probably political resistance to changing retirement plans. But I see your comments as adding force to my call to get comprehensive numbers so we can all see the full costs of current arrangements and alternative plans. Then there can be a rational discussion of a defined contribution (DC) vs a CALPERS style pension plan. Employees could see how substantial and safe benefits would be under a sensible DC plan, and then the political resistance to change might lessen. The City might have the opportunity in bkr to transition from a costly, opaque, quasi-irrational DB plan and move to a sensible DC plan, but that opportunity might be lost if there is not careful, proper analysis before a bankruptcy exit plan is adoptedNednoreply@blogger.comtag:blogger.com,1999:blog-8236405782975490260.post-26564877986895001942013-10-09T09:11:57.932-07:002013-10-09T09:11:57.932-07:00Ned,
Since you commented on defined contribution ...Ned,<br /><br />Since you commented on defined contribution plans, I will add something I left out of the post.<br /><br />I believe if the City were to change bankruptcy strategy and target pensions for cuts, it would only be worth the effort and risk it if they were seeking a much larger change to the system like a conversion to a defined contribution plan. I agree that a defined contribution plan is a better system, but I don't see anything close to the political support needed for that kind of change in strategy. At best, there might be support for caps and claw backs of spiking. I think pension reform advocates overstate the savings from those more limited measures, and may underestimate the cost of achieving them.<br /><br />Jeff Jeffhttps://www.blogger.com/profile/10344751623916759400noreply@blogger.comtag:blogger.com,1999:blog-8236405782975490260.post-5159852233921709852013-10-09T08:47:14.763-07:002013-10-09T08:47:14.763-07:00I agree with most of your comments. The very first...I agree with most of your comments. The very first requirement, however, is proper, comprehensive accounting so we can see the full amount of pension and OPEB liabilities as part of regular financial statements. The liability effects of MOUs should be considered and pro forma booked into financial reports, then folks can see the true costs. Right now, with no financial statements, no audits, no fully booked pension and OPEB, and only a narrow general fund focus, you really cannot determine the complete picture. A defined contribution DC plan would have many benefits over a classic pension plan. A DC plan can be very generous and used to purchase competitive annuities providing lifetime retirement income. Further, there are substantial assets that are valuable and available, and would be reflected on City-wide financial reports, but there does not seem to be much discussion of those alternatives. The City needs to get much better at financial reporting, internal control, "financial literacy" and transparency, e.g., last night management submitted to EMMA (akin to the SEC) a 6/30/2012 Water Fund Audit report that apparently has not been reviewed or approved by the Audit Committee or the City Council, and the auditor engagement docs have not been disclosed. This is all very irregular. We need substantial improvements in City administrative capability before definitive agreements are reach on a bankruptcy exit plan, and similarly, a Novemeber 2013 vote favoring a sales tax is premature given the paucity of comprehensive, reliable financial information.Nednoreply@blogger.com