Originally Posted by SunsetMan
Do you have proof the CALPERS money was not put into the plan? My roommate says all the money was only used for CALPERS.
I had a discussion with him that his pension could become insolvent if California became bankrupt, that promises were made that CA maybe could not keep. He was fairly convinced that was impossible.
To understand CalPERS you have to understand how they pay out. There are three streams.
1. Intrest off their holdings. This runs 70-90% depending on the economy. I haven't checked the current rate in awhile but it is out there if you want to find it.
2. Employee contributions. For public safety it is default 9% of each working employee's pay. Non public safety is 7%.
3. Employer contributions. This varies. During much of the 90s and 2000s most cities paid 0-5% assuming they did not pay their employees' share. I looked up my city and they got 2% back one quarter. Also factored into this is disability retirements CalPERS has to pay for people vs. the city paying for it. I won't even go there because I could write 10 pages on that alone.
Essentially for CalPERS to go bankrupt cities would have to stop paying into it yet demand their retirees get paid by CalPERS. Not going to happen. CalPERS would tell them to pay them or they are on their own.
CalPERS is essentially like the Mob. Once you are in there is only one way out, meanwhile you pay the vig.
Also CalPERS is a public/private organization. Somewhat similar to BART.