CalPERS Weighs In On Controversial Upcoming Pension Ballot Measure

CalPERS CEO Anne Stausboll recently penned a letter weighing in on the state’s upcoming pension ballot measure – and suggested the measure could pose problems for the pension fund and might even be illegal.

[Read more about the measure here.]

Stausboll wrote the letter to a state lawmaker, but it was obtained this week by Reuters. From Reuters:

Anne Stausboll, the chief executive officer of the California Public Employees’ Retirement System, said in a letter the ballot measure could also create problems with the IRS and could create huge additional costs for Calpers, which has assets of more than $300 billion.

[…]

Although [former San Jose mayor Chuck] Reed’s ballot initiative seeks to cut pensions for new hires, Stausboll said the initiative might also end up cutting benefits for existing workers. She said that could be illegal because it would breach the so-called “California rule”, which states that workers cannot see benefits cut after they are hired.

Stausboll said the initiative “could create issues with the Internal Revenue Service” and threaten Calpers’s tax exempt status. She also said the initiative, if it succeeds, would effectively end death and disability benefits and the closing of defined benefit plans to new workers would upend Calpers’s accounting assumptions, “requiring new investment strategies and actuarial assumptions.”

Reed said of Stausboll’s comments: “Calpers is largely responsible for the trouble we are in now and they are quite happy with the status quo. They are not exactly an impartial party. I’m not surprised they would find fault with our initiative.”

CalPERS is the country’s largest public pension fund.

Photo by  rocor via Flickr CC License