CalSTRS' investment losses have left the system underfunded by $42.6 billion, with almost double the unfunded liabilities it had estimated 19 months ago.
In a report on the $131.9 billion system's website, Jack Ehnes, CEO of the California State Teachers' Retirement System, estimated its defined benefit program would run out of money by 2045 without an increase in contributions by school systems, the state of California or teachers.
Mr. Ehnes says CalSTRS has no authority to impose such an increase, unlike pension plans in other states. Instead, he says the California Legislature must approve such an increase, but he concedes that action this year is unlikely given the political climate and California's $20 billion budget deficit.
California teachers already contribute a higher percentage of their income to CalSTRS than workers contribute to social security. There have been proposals in the past to increase all three components: the state's contribution, the school district's, and the teacher's. Expect to see such proposals revived.
4 comments:
This is why I have a 403(b) account.
I think the probability that CalSTRS contributors from my generation (born in 1966) will get at least what they put in (ROI >0) is higher than the probability for the equivalent situation for OASDI contributors.
But as I've commented before on this blog, it is a certainty that CalSTRS will ask for more money from districts in the future. Too, I wouldn't be surprised if they cut benefits.
TRS has in place the "Rule of 80" wherein your age plus time served must equal 80 before you can get full benefits. That will happen when I turn 61. That's eight years away. But the real problem is that since Texas doesn't take social security out, teachers like me who worked outside of education for awhile will take a hit on what they get from social security. Not only that, but should my husband outlive me, HE will take a hit on HIS social security as well. And people wonder why Texans do not trust the federal government. At least you have a few more years than I do to make up the loss of income. What is scary is how our savings in the stock market have plummeted. I truly think I will end up dying on the job. That's a pretty sobering reality.
BTW, you might like to look up the dark horse in our governor's race, Debra Medina.
That social security Windfall Elimination Provision sure is a you-know-what, isn't it? I didn't start teaching until I was 32. 14 years paid into social security, and I won't see it because I have a "pension" that's going broke.
Ponzi scheme.
Hell Darren, you're rich and you don't need that money...it needs to be redistributed to its rightful owners....
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