Wednesday, May 27, 2009

Rate Hikes for the Retirement Fund

I've written several posts about the California State Teachers Retirement System, or CalSTRS (Cal-stirs) for short. In this post from over 2 years ago I discussed potential raises in my "contribution" that were being considered in order to keep the fund solvent.

Nothing happened on that front in the last two-plus years, but now that times are bad, such ideas are on the table again:

CalSTRS, hit with significant investment losses in the past year, is preparing to ask the Legislature for billions of dollars in higher pension contributions from the state, school districts and teachers.

The request might not come for another year or so, and the higher rates might not kick in until even further down the road. But the California State Teachers' Retirement System is laying the groundwork now, prepping lawmakers and lobbyists on an issue that could meet with considerable resistance as the state struggles with a historic deficit and school districts are laying off teachers...

The process of seeking approval kicked into gear Tuesday, when Cal-STRS staff revealed that the fund's long-term funding gap had grown to $22.5 billion as of last June, up from $20.7 billion a year earlier. That's an annual measure of how much more CalSTRS says it needs to fund its pension benefits over the next 30 years.


I wonder if I'll get that retirement villa on the French Riviera after all.
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6 comments:

  1. Amerloc6:50 PM

    LOL - you might have to set your sights a little lower, and join me in rural Texas.

    We're way short on beaches, but the barbeque is good.

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  2. maxutils2:17 AM

    This is all panic mode. Our current contribution is set to mirror FICA, and should be sufficient -- we look insolvent now only because the market is down.

    Patience, grasshopper.

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  3. Darren6:31 AM

    Our contribution is higher than social security, and the district's contribution is higher than an employer contribution to social security. And don't forget the state's kick-in!

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  4. maxutils4:38 PM

    Isn't it roughly 8% apiece?

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  5. Darren4:49 PM

    We put in 8, the district puts in 8.5, and the state puts in 2.

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  6. maxutils1:11 AM

    And you know where I'm going next -- the district doesn't actually put in 8.5, they reduce our pay by that much and contribute it to retirement. So, the only real difference is the 2% from the state, which arguably could have gone to our pay otherwise. It's glorified social security, just better benefits and more solvent. Non public school teachers: remember that, the next time someone suggests investment based social security reform.

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