The Sacramento Bee reports that ACA 23, a constitutional amendment proposed by Assemblyman Keith Richman, would replace the traditional defined benefit public pension plan with a new hybrid plan. State and local government workers would be guaranteed both a pension benefit and a voluntary, employer-matched 401(k)-style account. The defined benefits would be less generous than those offered currently.
Richman called the CalPERS move politically motivated and premature, saying, “It is difficult for me to understand how they can vote on a proposal without an analysis of the adequacy of the benefit and the actuarial cost of the proposal. CalSTRS (California State Teachers’ Retirement System) has delayed making a decision while they await further analysis.” Two weeks ago, the teacher’s retirement board postponed a decision on the bill because Richman had revised his measure. Officials have asked their outside actuary to update a financial analysis of the bill, according to the Bee.
Richman said the CalPERS review of the plan included an analysis of his 2005 proposal, but did not project costs for ACA 23. CalPERS said they could not determine the exact impact of the bill since the defined benefit component of Richman’s proposal lacked specifics.
In opposing the measure, CalPERS argued the plan would create a two-tier benefit program and could hamper future investments and boost contribution rates for the state, cities and other public employers.
Richman has also introduce a bill that proposes an outside audit of CalPERS actuarial practices every three years (See Proposed Bill would Impose More Scrutiny on CalPERS).