7 ms·

California pays a lot of pensions. Pensions are stupid. Just pay people for the time that they work. We have social security, we have welfare, we have MediCal M

California pays a lot of pensions. Pensions are stupid. Just pay people for the time that they work. We have social security, we have welfare, we have MediCal Medicaid, we have affordable housing. People can also invest in their own retirement accounts throughout their careers. It's stupid.

lotsofpulp 5y ago
Defined benefit pensions allow politicians to spend money today without having to increase taxes today. No politician is going to win an election by saying they are going to offer government employees competitive cash compensation today, and hence higher taxes today, for the benefit of future taxpayers.
manuelabeledo 5y ago
> People can also invest in their own retirement accounts throughout their careers. It takes an illness and a lifetime of making less than the average wage, to condemn a person to poverty after retirement. Pensions are essential all around the developed world. They are not "stupid", they are one of the pillars of elderly protection.
- jdavis703 5y ago
  But if you’re on disability and not working you’re not earning a pension either. This doesn’t seem like an argument against retirement savings accounts, it seems like you’re arguing for Social Security, which is totally unrelated.
- thehappypm 5y ago
  Pensions are a great thing for the retired. For everyone else they’re unsustainable, growing tax burdens. I agree with OP. We need to end new pensions right now, transition everyone to self-funding retirement through tax advantaged accounts, give a good baseline via Social Security and Medicare, and then fill the gaps with things like disability.
- lotsofpulp 5y ago
  Defined benefit pensions are stupid unless you can print money. So it is fine for the US federal government to offer, such as Social Security, but since no one can see 5, 10, 20, or 30+ years into the future, no city, county, or state should be in the business of promising things that far into the future. Otherwise, as evidenced by basically every data point, politicians will promise the DB pensions, then not fund them, then lay the costs on future generations.
  - hnaccount_rng 5y ago
    You really wouldn’t like Europe then xD
  - manuelabeledo 5y ago
    You keep using the word "stupid", and I don't think you know what it means. It would be "stupid" to not pay pensions, unless you don't see the risks in leaving a whole generation in their elderly years with no income whatsoever. Most evident of all, it would be a deadly blow agains the economy itself, especially in developed countries with aging populations.
    - thehappypm 5y ago
      Nobody is proposing to just pull the rug out on pensions. We need to transition to a more sustainable option.
      - manuelabeledo 5y ago
        Why aren't pensions sustainable? Honest question. At least in the US, there seems to be more than enough money to keep several branches going. The military just got $20 billion extra this year. Foreign aid is around $45 billion a year. It's not that there isn't enough tax money.
        maxerickson 5y ago
        They inevitably fall into the trap of promising that benefits will be paid for in the future. At a national level that is probably okay, at a municipal level it means that people that leave a city get services that they don't pay for, and future residents pay for services they didn't benefit from. It's a terrible alignment.
mushufasa 5y ago
Well, in practice, most people don't have the proper education to invest well for their own retirement, so they end up doing it poorly or not at all, and then end up in bad situations. In many other developed countries, like a lot of European countries, pensions are even more common than the USA. You can say it is paternalistic, but it also takes away the freedom for people to shoot themselves in the foot.
- lotsofpulp 5y ago
  It does not take much education with the availability of target date retirement funds these days. Also, plenty of governments have shot their populations in the foot on behalf of the people anyway by underfunding and corruptly or idiotically investing pension funds.
- jdavis703 5y ago
  Government workers aren’t poorly educated though. And workplaces are allowed to set default and auto-increasing contributions to make up for poor financial literacy.
- theduder99 5y ago
  lets ban alcohol to take away the freedom of people to commit duis
Hjfrf 5y ago
The reason for pensions is that people don't generally invest enough money unless they legally have to. Then the state is stuck picking up the bill for homelessness and healthcare and crime.
- lotsofpulp 5y ago
  The states do not invest enough money either. And they do not legally have to (they are exempt from all the DB pension funding rules that apply to non government entities).
- jdavis703 5y ago
  Old people barely commit any crimes and Medicare is already a right… Most retired people (pension or not) can’t afford private health insurance.
- inglor_cz 5y ago
  "people don't generally invest enough money" Looking at the exploding sovereign debt around the world, this seems to be true on the governmental level as well. At least if we speak about "own" money instead of "owed" money. The EU has basically given up on Maastricht stability criteria for the euro by now. "No more than 60 per cent of GDP in debt" is about as reachable as the Moon for most members.
bdcravens 5y ago
> California ... we have affordable housing California is 2nd to Hawaii in home prices and more importantly, payment to income ratio https://www.fool.com/the-ascent/research/average-house-price-state/ https://www.fool.com/the-ascent/research/average-house-price... California has the 2nd lowest percentage of home ownership, and is among the highest decline in home ownership over the past 15 years. https://ipropertymanagement.com/research/homeownership-rate-by-state https://ipropertymanagement.com/research/homeownership-rate-...
- ralusek 5y ago
  I meant that we have government subsidized housing all over the country. California has its own problems related to supply constrained housing, but I don't understand why the expectation should be that anyone is entitled to live in one of the most desired locations on the planet. You don't have to retire in California.
  - bdcravens 5y ago
    Sorry, that wasn't clear to me. In that case, I agree 100%
throw0101a 5y ago
> People can also invest in their own retirement accounts throughout their careers. It's stupid. People can but will they? From what I've seen, no they won't. This is how you get an aged / aging population that has not saved enough, but often cannot work (e.g., because of health reasons). Then you have a sizeable demographic that's stuck eating proverbial cat food. Further, even when people do save, they put money into absolute non-sense things either because they think they can beat the market (spoiler: 99.99% of us can't [1]) or because they don't know what to invest in and may not have the time to learn. Forced savings [1] is a good thing for the general population. Of course you are different, and don't suffer from cognitive/behaviour biases, so you'll do better than average and beat the market. [1] https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street [2] https://en.wikipedia.org/wiki/Forced_saving https://en.wikipedia.org/wiki/Forced_saving
- lotsofpulp 5y ago
  >Further, even when people do save, they put money into absolute non-sense things either because they think they can beat the market (spoiler: 99.99% of us can't [1]) or because they don't know what to invest in and may not have the time to learn. The situation has changed with the advent of near zero cost index funds and target date retirement funds. There is no reason for pension fund managers to exist when they have been automated.
  - throw0101a 5y ago
    > The situation has changed with the advent of near zero cost index funds and target date retirement funds. Again, this assumes that people will actually invest. Which plenty of people do not do. For a large portion of they never bother setting anything up. As someone who participates in /r/PersonalFinanceCanada a lot, the number of posts that say something like "my parents are 60 and have nothing saved" is quite tragic. There are books written on folks who have only started late in the game: * https://www.moneysense.ca/save/retirement/procrastinating-on-saving-for-retirement-theres-still-hope/ https://www.moneysense.ca/save/retirement/procrastinating-on... The problem is not technical in nature on the products one should buy, but behaviour on actually buying anything (even if it's a shitty mutual fund with a MER of 2%). Getting people saving something, anything is the problem. Forced savings are a good thing for a very, very large portion of the population.
PopAlongKid 5y ago
I believe the real problem is that market-level salaries are determined by surveying comparable jobs in private firms, but without taking into account the added compensation represented by a pension. I used to work for a large regulated utility in the IT area, and my job came with a defined benefit pension. However, my salary was substantially below market, which I know because after more than 15 years, I left and took a job in private industry with an immediate 25% bump in annual salary, but without a pension. Basically, a pension is an understanding that you accept lower pay during your career in exchange for a guaranteed annuity in retirement, but the workers have by and large completely broken their side of the tacit agreement.
- lotsofpulp 5y ago
  The governments underfunding and corruptly investing pension funds did not break their side of the agreement? Or the numerous private employers where employees have had to take a reduction on their promised compensation? Why would anyone trust a good politician to nominate a good pension fund board member to hire good investment firms to make good investments when you can cut all that agency risk out and just stick your money in VOO and VCSH or a target date retirement fund at Vanguard/Fidelity/Schwab?
Pulcinella 5y ago
California public teachers don’t have Social Security. They people into their retirement system pension plan instead.
- lotsofpulp 5y ago
  As a result of previous leaders of California teachers’ unions choosing to risk receiving higher benefits from the state of California (which cannot print USD, exposing benefit recipients to more risk) rather than the benefits that come from the federal government (which can print USD and always make good on its promise, minimizing benefit recipients’ risk). In this scheme, earlier generations of California teachers will make out great. Latter generations of California teachers will suffer. The typical result of DB pension schemes.
foobiekr 5y ago
Retirement accounts effectively mean you are managing a pension fund of one (or two, if a couple) which means the amortization benefits are absent and all of your payout modeling has to be around the worst case. People like us, assuming you are building out a retirement portfolio, would be much, much better off if legal constructs existed that made participation in a pension-like vehicle possible. Annuities as they exist today aren't a good answer due to questions around solvency and (lack of) government backing/enforcement. A pension fund of one or two is very risky and so you need to take a lower withdrawal rate, especially if you find yourself starting your withdrawal in times of very high valuations.
- thehappypm 5y ago
  What’s the problem with annuities? They exist to solve that problem.
  - foobiekr 5y ago
    Inflation and downside risk if the company turns out to be a fraud, financial failure, etc.
    - thehappypm 5y ago
      It’s a problem if my 401(k) provider fails too.
seanmcdirmid 5y ago
Many states are switching over to 401Ks from pensions, but the trade off is that they have to increase salaries and pay into those investment accounts now rather than paying out later. It is actually a good idea I think, something that tech mostly already does, and private industry is also moving to.
- thehappypm 5y ago
  My mom is a teacher and her school just switched them to 401(k). It was not a popular decision but it’s obviously a better move for the school since they will eventually not have to pay out any funds to anyone who doesn’t actually work at the school.
  - seanmcdirmid 5y ago
    > but it’s obviously a better move for the school since they will eventually not have to pay out any funds to anyone who doesn’t actually work at the school. The school district has to pay now rather than pay later (not only the employer contribution, but salary is generally higher to make up for the lack of a juicy pension). The 401K is also persistent (you don't need to work X amount of years at the school district for it to stick), and if you die early, your heirs inherit it rather than it just going poof. It isn't an obvious win for the school district...and it does keep them more honest in that they can't pretend their investment returns will be higher than they actually are.
    - thehappypm 5y ago
      The school district might have 100 employees but have 100 active pensions. Compare that to having 100 employees being paid 5% more and 0 pensions..
      - seanmcdirmid 5y ago
        > The school district might have 100 employees but have 100 active pensions. Compare that to having 100 employees being paid 5% more and 0 pensions.. A bit more than 5%, but exactly (about $30k/year to fully fund a 401k from employee and employer side, sans whatever the employee contribution was before).
twobitshifter 5y ago
Alternatively 401ks are stupid. They transfer the market risk to individuals which can result in dramatic loss of savings of no fault of the naïve general investor. Once more, they transfer wealth from wage earners to the investment class and by automatically investing more, inflate the divide between rich and poor and drive up valuations. They take dumb investor money and then add regulated inflexibility that locks it up in stock investments. These investors are told to never sell even in a crash. It’s HOLLDD in its original form. Another result in the market is that few 401k investors play anything other than indexes, which means that companies become owned by huge funds that don’t exert any control over the companies they own and don’t care about their performance. This corrupts the corporate level since accountability to investors is weakened. Otherwise it’s great as long as stocks always go up.
- thehappypm 5y ago
  401(k)s give you the flexibility to invest how you want. You can buy bonds, or ETFs, whatever mix you want. Just because the best investment option in the 21st century has generally been stocks doesn’t mean it has to be that way for every investor.
- richwater 5y ago
  > dramatic loss of savings of no fault of the naïve general investor. Not weighting your investments towards bonds as you get closer to retirement is solely on the individual. > These investors are told to never sell even in a crash Realizing losses on money you don't need for 20 years is an incredible stupid thing to do. The instruction here is almost always correct.
opportune 5y ago
I think you could fix pensions without destroying them. Instead of reiterating what most others have said about how it’s a nice benefit and a way to compete with the private sector, I’ll point out that the way pension amounts are calculated (often involving some percent of the average pay for X% of someone’s Y highest earnings years) incentivized fraud and overspending. If you fix that, you could likely see more reasonable pension costs. An easy fix would be to just have OT pay not factor in this calculation and otherwise keep it the same. It’s pretty common to hear about police officers and firefighters supposedly working >80 hr/week for extended periods. I’m not saying it’s impossible for that to happen naturally, but I think it is greatly incentivized by pension calculations. The OT pay itself being time fraud isn’t a huge deal in the grand scheme of things, but the fact the taxpayer has to pay it over and over again over potentially decades really makes it consequential and something we need to disincentivize (note I’m NOT suggesting we even get rid of OT. Just remove it from pension calculations). Another controversial statement: a lot of public jobs in CA pay a lot of money. I don’t think they necessarily need to have their pay cut but you could probably reduce the pension to like 40-50% of max income. Someone making $120k/yr has plenty of money to make other retirement contributions and still live well off an extra $50k+/yr. Healthy pensions are good to avoid destitution but $100k/yr pernsion is a lot of money…

lotsofpulp 5y ago

Defined benefit pensions allow politicians to spend money today without having to increase taxes today. No politician is going to win an election by saying they are going to offer government employees competitive cash compensation today, and hence higher taxes today, for the benefit of future taxpayers.

manuelabeledo 5y ago

> People can also invest in their own retirement accounts throughout their careers. It takes an illness and a lifetime of making less than the average wage, to condemn a person to poverty after retirement. Pensions are essential all around the developed world. They are not "stupid", they are one of the pillars of elderly protection.

jdavis703 5y ago
But if you’re on disability and not working you’re not earning a pension either. This doesn’t seem like an argument against retirement savings accounts, it seems like you’re arguing for Social Security, which is totally unrelated.
thehappypm 5y ago
Pensions are a great thing for the retired. For everyone else they’re unsustainable, growing tax burdens. I agree with OP. We need to end new pensions right now, transition everyone to self-funding retirement through tax advantaged accounts, give a good baseline via Social Security and Medicare, and then fill the gaps with things like disability.
lotsofpulp 5y ago
Defined benefit pensions are stupid unless you can print money. So it is fine for the US federal government to offer, such as Social Security, but since no one can see 5, 10, 20, or 30+ years into the future, no city, county, or state should be in the business of promising things that far into the future. Otherwise, as evidenced by basically every data point, politicians will promise the DB pensions, then not fund them, then lay the costs on future generations.
- hnaccount_rng 5y ago
  You really wouldn’t like Europe then xD
- manuelabeledo 5y ago
  You keep using the word "stupid", and I don't think you know what it means. It would be "stupid" to not pay pensions, unless you don't see the risks in leaving a whole generation in their elderly years with no income whatsoever. Most evident of all, it would be a deadly blow agains the economy itself, especially in developed countries with aging populations.
  - thehappypm 5y ago
    Nobody is proposing to just pull the rug out on pensions. We need to transition to a more sustainable option.
    - manuelabeledo 5y ago
      Why aren't pensions sustainable? Honest question. At least in the US, there seems to be more than enough money to keep several branches going. The military just got $20 billion extra this year. Foreign aid is around $45 billion a year. It's not that there isn't enough tax money.
      - maxerickson 5y ago
        They inevitably fall into the trap of promising that benefits will be paid for in the future. At a national level that is probably okay, at a municipal level it means that people that leave a city get services that they don't pay for, and future residents pay for services they didn't benefit from. It's a terrible alignment.

mushufasa 5y ago

Well, in practice, most people don't have the proper education to invest well for their own retirement, so they end up doing it poorly or not at all, and then end up in bad situations. In many other developed countries, like a lot of European countries, pensions are even more common than the USA. You can say it is paternalistic, but it also takes away the freedom for people to shoot themselves in the foot.

lotsofpulp 5y ago
It does not take much education with the availability of target date retirement funds these days. Also, plenty of governments have shot their populations in the foot on behalf of the people anyway by underfunding and corruptly or idiotically investing pension funds.
jdavis703 5y ago
Government workers aren’t poorly educated though. And workplaces are allowed to set default and auto-increasing contributions to make up for poor financial literacy.
theduder99 5y ago
lets ban alcohol to take away the freedom of people to commit duis

Hjfrf 5y ago

The reason for pensions is that people don't generally invest enough money unless they legally have to. Then the state is stuck picking up the bill for homelessness and healthcare and crime.

lotsofpulp 5y ago
The states do not invest enough money either. And they do not legally have to (they are exempt from all the DB pension funding rules that apply to non government entities).
jdavis703 5y ago
Old people barely commit any crimes and Medicare is already a right… Most retired people (pension or not) can’t afford private health insurance.
inglor_cz 5y ago
"people don't generally invest enough money" Looking at the exploding sovereign debt around the world, this seems to be true on the governmental level as well. At least if we speak about "own" money instead of "owed" money. The EU has basically given up on Maastricht stability criteria for the euro by now. "No more than 60 per cent of GDP in debt" is about as reachable as the Moon for most members.

bdcravens 5y ago

> California ... we have affordable housing California is 2nd to Hawaii in home prices and more importantly, payment to income ratio https://www.fool.com/the-ascent/research/average-house-price-state/ https://www.fool.com/the-ascent/research/average-house-price... California has the 2nd lowest percentage of home ownership, and is among the highest decline in home ownership over the past 15 years. https://ipropertymanagement.com/research/homeownership-rate-by-state https://ipropertymanagement.com/research/homeownership-rate-...

ralusek 5y ago
I meant that we have government subsidized housing all over the country. California has its own problems related to supply constrained housing, but I don't understand why the expectation should be that anyone is entitled to live in one of the most desired locations on the planet. You don't have to retire in California.
- bdcravens 5y ago
  Sorry, that wasn't clear to me. In that case, I agree 100%

throw0101a 5y ago

> People can also invest in their own retirement accounts throughout their careers. It's stupid. People can but will they? From what I've seen, no they won't. This is how you get an aged / aging population that has not saved enough, but often cannot work (e.g., because of health reasons). Then you have a sizeable demographic that's stuck eating proverbial cat food. Further, even when people do save, they put money into absolute non-sense things either because they think they can beat the market (spoiler: 99.99% of us can't [1]) or because they don't know what to invest in and may not have the time to learn. Forced savings [1] is a good thing for the general population. Of course you are different, and don't suffer from cognitive/behaviour biases, so you'll do better than average and beat the market. [1] https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street [2] https://en.wikipedia.org/wiki/Forced_saving https://en.wikipedia.org/wiki/Forced_saving

lotsofpulp 5y ago
>Further, even when people do save, they put money into absolute non-sense things either because they think they can beat the market (spoiler: 99.99% of us can't [1]) or because they don't know what to invest in and may not have the time to learn. The situation has changed with the advent of near zero cost index funds and target date retirement funds. There is no reason for pension fund managers to exist when they have been automated.
- throw0101a 5y ago
  > The situation has changed with the advent of near zero cost index funds and target date retirement funds. Again, this assumes that people will actually invest. Which plenty of people do not do. For a large portion of they never bother setting anything up. As someone who participates in /r/PersonalFinanceCanada a lot, the number of posts that say something like "my parents are 60 and have nothing saved" is quite tragic. There are books written on folks who have only started late in the game: * https://www.moneysense.ca/save/retirement/procrastinating-on-saving-for-retirement-theres-still-hope/ https://www.moneysense.ca/save/retirement/procrastinating-on... The problem is not technical in nature on the products one should buy, but behaviour on actually buying anything (even if it's a shitty mutual fund with a MER of 2%). Getting people saving something, anything is the problem. Forced savings are a good thing for a very, very large portion of the population.

PopAlongKid 5y ago

I believe the real problem is that market-level salaries are determined by surveying comparable jobs in private firms, but without taking into account the added compensation represented by a pension. I used to work for a large regulated utility in the IT area, and my job came with a defined benefit pension. However, my salary was substantially below market, which I know because after more than 15 years, I left and took a job in private industry with an immediate 25% bump in annual salary, but without a pension. Basically, a pension is an understanding that you accept lower pay during your career in exchange for a guaranteed annuity in retirement, but the workers have by and large completely broken their side of the tacit agreement.

lotsofpulp 5y ago
The governments underfunding and corruptly investing pension funds did not break their side of the agreement? Or the numerous private employers where employees have had to take a reduction on their promised compensation? Why would anyone trust a good politician to nominate a good pension fund board member to hire good investment firms to make good investments when you can cut all that agency risk out and just stick your money in VOO and VCSH or a target date retirement fund at Vanguard/Fidelity/Schwab?

Pulcinella 5y ago

California public teachers don’t have Social Security. They people into their retirement system pension plan instead.

lotsofpulp 5y ago
As a result of previous leaders of California teachers’ unions choosing to risk receiving higher benefits from the state of California (which cannot print USD, exposing benefit recipients to more risk) rather than the benefits that come from the federal government (which can print USD and always make good on its promise, minimizing benefit recipients’ risk). In this scheme, earlier generations of California teachers will make out great. Latter generations of California teachers will suffer. The typical result of DB pension schemes.

foobiekr 5y ago

Retirement accounts effectively mean you are managing a pension fund of one (or two, if a couple) which means the amortization benefits are absent and all of your payout modeling has to be around the worst case. People like us, assuming you are building out a retirement portfolio, would be much, much better off if legal constructs existed that made participation in a pension-like vehicle possible. Annuities as they exist today aren't a good answer due to questions around solvency and (lack of) government backing/enforcement. A pension fund of one or two is very risky and so you need to take a lower withdrawal rate, especially if you find yourself starting your withdrawal in times of very high valuations.

thehappypm 5y ago
What’s the problem with annuities? They exist to solve that problem.
- foobiekr 5y ago
  Inflation and downside risk if the company turns out to be a fraud, financial failure, etc.
  - thehappypm 5y ago
    It’s a problem if my 401(k) provider fails too.

seanmcdirmid 5y ago

Many states are switching over to 401Ks from pensions, but the trade off is that they have to increase salaries and pay into those investment accounts now rather than paying out later. It is actually a good idea I think, something that tech mostly already does, and private industry is also moving to.

thehappypm 5y ago
My mom is a teacher and her school just switched them to 401(k). It was not a popular decision but it’s obviously a better move for the school since they will eventually not have to pay out any funds to anyone who doesn’t actually work at the school.
- seanmcdirmid 5y ago
  > but it’s obviously a better move for the school since they will eventually not have to pay out any funds to anyone who doesn’t actually work at the school. The school district has to pay now rather than pay later (not only the employer contribution, but salary is generally higher to make up for the lack of a juicy pension). The 401K is also persistent (you don't need to work X amount of years at the school district for it to stick), and if you die early, your heirs inherit it rather than it just going poof. It isn't an obvious win for the school district...and it does keep them more honest in that they can't pretend their investment returns will be higher than they actually are.
  - thehappypm 5y ago
    The school district might have 100 employees but have 100 active pensions. Compare that to having 100 employees being paid 5% more and 0 pensions..
    - seanmcdirmid 5y ago
      > The school district might have 100 employees but have 100 active pensions. Compare that to having 100 employees being paid 5% more and 0 pensions.. A bit more than 5%, but exactly (about $30k/year to fully fund a 401k from employee and employer side, sans whatever the employee contribution was before).

twobitshifter 5y ago

Alternatively 401ks are stupid. They transfer the market risk to individuals which can result in dramatic loss of savings of no fault of the naïve general investor. Once more, they transfer wealth from wage earners to the investment class and by automatically investing more, inflate the divide between rich and poor and drive up valuations. They take dumb investor money and then add regulated inflexibility that locks it up in stock investments. These investors are told to never sell even in a crash. It’s HOLLDD in its original form. Another result in the market is that few 401k investors play anything other than indexes, which means that companies become owned by huge funds that don’t exert any control over the companies they own and don’t care about their performance. This corrupts the corporate level since accountability to investors is weakened. Otherwise it’s great as long as stocks always go up.

thehappypm 5y ago
401(k)s give you the flexibility to invest how you want. You can buy bonds, or ETFs, whatever mix you want. Just because the best investment option in the 21st century has generally been stocks doesn’t mean it has to be that way for every investor.
richwater 5y ago
> dramatic loss of savings of no fault of the naïve general investor. Not weighting your investments towards bonds as you get closer to retirement is solely on the individual. > These investors are told to never sell even in a crash Realizing losses on money you don't need for 20 years is an incredible stupid thing to do. The instruction here is almost always correct.

opportune 5y ago

I think you could fix pensions without destroying them. Instead of reiterating what most others have said about how it’s a nice benefit and a way to compete with the private sector, I’ll point out that the way pension amounts are calculated (often involving some percent of the average pay for X% of someone’s Y highest earnings years) incentivized fraud and overspending. If you fix that, you could likely see more reasonable pension costs. An easy fix would be to just have OT pay not factor in this calculation and otherwise keep it the same. It’s pretty common to hear about police officers and firefighters supposedly working >80 hr/week for extended periods. I’m not saying it’s impossible for that to happen naturally, but I think it is greatly incentivized by pension calculations. The OT pay itself being time fraud isn’t a huge deal in the grand scheme of things, but the fact the taxpayer has to pay it over and over again over potentially decades really makes it consequential and something we need to disincentivize (note I’m NOT suggesting we even get rid of OT. Just remove it from pension calculations). Another controversial statement: a lot of public jobs in CA pay a lot of money. I don’t think they necessarily need to have their pay cut but you could probably reduce the pension to like 40-50% of max income. Someone making $120k/yr has plenty of money to make other retirement contributions and still live well off an extra $50k+/yr. Healthy pensions are good to avoid destitution but $100k/yr pernsion is a lot of money…