Pension liabilities are one of the most important, and most poorly understood, fiscal challenges facing California.
Pension contributions are around 15 percent for some smaller California cities.
These pension contribution increases arise because the pension system is not fully funded by accumulated pension assets and the shortfall is made up by taxpayers.
Pension fund agencies, such as CalPERS, the California Public Employee Retirement System, measure these liabilities based on assumptions about the future returns on the pension fund investments.
Assumptions about future pension returns, which are highly uncertain, are used in making calculations of unfunded pension liabilities as if they are certain returns.
The size of the state's unfunded pension liability is much larger when calculated using the returns on Treasury securities, with maturities matched to the timing of pension payouts.
Pension spiking is the process of artificially inflating employee compensation prior to retirement in order to increase the lifetime pension.
https://www.hoover.org/research/pension-reform
Pension contributions are around 15 percent for some smaller California cities.
These pension contribution increases arise because the pension system is not fully funded by accumulated pension assets and the shortfall is made up by taxpayers.
Pension fund agencies, such as CalPERS, the California Public Employee Retirement System, measure these liabilities based on assumptions about the future returns on the pension fund investments.
Assumptions about future pension returns, which are highly uncertain, are used in making calculations of unfunded pension liabilities as if they are certain returns.
The size of the state's unfunded pension liability is much larger when calculated using the returns on Treasury securities, with maturities matched to the timing of pension payouts.
Pension spiking is the process of artificially inflating employee compensation prior to retirement in order to increase the lifetime pension.
https://www.hoover.org/research/pension-reform
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