The State Worker

Chronicling civil-service life for California state workers

March 26, 2009
Public pensions should go from 'gain sharing' to 'pain sharing'

Malibu-based public pension consultant Girard Miller lays out the case for shifting more public pension costs to employees in,"Sharing the pension pain," in A few paragraphs will give a sense of his argument:

A decade ago, public employee unions lobbied for "gain-sharing" in which they got a share of governmental revenues or surplus investment returns. Very few governments actually established such systems, but those who did should now be demanding "pain-sharing" arrangements. Others may have no choice but to pursue the same course, because they naïvely granted de facto 'gain-sharing' deals through permanent and irreversible benefit increases when stocks peaked in 2000. Now they must achieve equilibrium through higher contributions ....
An ideal, properly balanced solution for most employers would be to require or bargain for their employees to pay one-half of the increased costs of pension benefits that resulted from the market meltdown. In some cases, this will take several years to accomplish, because of actuarial smoothing. In some cases, the increase in payroll withholding may be too abrupt for employees to absorb if their salaries have been frozen, and it might take a few years to ramp up their contributions ...
A corollary remedy for retirement medical benefits plans is to split the actuarial cost equally between employers and employees. Given the mounting magnitude of the OPEB underfunding (retiree health care), the primacy of pension benefits, and tight budgets everywhere, this may also require several years to ramp up, for both employers and employees ...

Retirees, Miller says, should share the pain, too. Government should defer COLAs:"... If salaries are frozen, in the worst economic crisis in 80 years, shouldn't pensions be as well?"

Click here to read the Miller article. You can read Miller's bio at this link.

On a related note, the San Diego Union-Tribune last weekend called for the 1,500 California government agencies that provide pensions through CalPERS to, "... return to pre-1999 pension benefits for all new hires. The old norm of non-public safety employees retiring with a pension equal to 2 percent of final pay times years of service wasn't just adequate; it was generous."

You can read the U-T editorial here.

Then the Daily Breeze last night published, "The pension predicament," that details how Redondo Beach, already struggling with falling tax revenues, now faces higher CalPERS' pension contributions. It also calls for pension changes.

You'll see more and more of these editorials and opinion pieces as CalPERS prepares to announce how much more employers will have to kick in to make up for the fund's asset losses. Could this create pressure to change pension benefits (for new hires, at least) on the state level?

About Comments

Reader comments on are the opinions of the writer, not The Sacramento Bee. If you see an objectionable comment, click the "report abuse" button below it. We will delete comments containing inappropriate links, obscenities, hate speech, and personal attacks. Flagrant or repeat violators will be banned. See more about comments here.

What You Should Know About Comments on is happy to provide a forum for reader interaction, discussion, feedback and reaction to our stories. However, we reserve the right to delete inappropriate comments or ban users who can't play nice. (See our full terms of service here.)

Here are some rules of the road:

• Keep your comments civil. Don't insult one another or the subjects of our articles. If you think a comment violates our guidelines click the "report abuse" button to notify the moderators. Responding to the comment will only encourage bad behavior.

• Don't use profanities, vulgarities or hate speech. This is a general interest news site. Sometimes, there are children present. Don't say anything in a way you wouldn't want your own child to hear.

• Do not attack other users; focus your comments on issues, not individuals.

• Stay on topic. Only post comments relevant to the article at hand. If you want to discuss an issue with a specific user, click on his profile name and send him a direct message.

• Do not copy and paste outside material into the comment box.

• Don't repeat the same comment over and over. We heard you the first time.

• Do not use the commenting system for advertising. That's spam and it isn't allowed.

• Don't use all capital letters. That's akin to yelling and not appreciated by the audience.

You should also know that The Sacramento Bee does not screen comments before they are posted. You are more likely to see inappropriate comments before our staff does, so we ask that you click the "report abuse" button to submit those comments for moderator review. You also may notify us via email at Note the headline on which the comment is made and tell us the profile name of the user who made the comment. Remember, comment moderation is subjective. You may find some material objectionable that we won't and vice versa.

If you submit a comment, the user name of your account will appear along with it. Users cannot remove their own comments once they have submitted them, but you may ask our staff to retract one of your comments by sending an email to Again, make sure you note the headline on which the comment is made and tell us your profile name.

hide comments
blog comments powered by Disqus

About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at


Now on the State Worker column

    [an error occurred while processing this directive]

State Pay Database

This database allows you to search the salaries of California's 300,000-plus state workers and view up to four years of their pay history.

Latest Capitol Alert headlines

    404 - Not Found - The Sacramento Bee, Sacramento, California

    404 Not Found

    Our apologies....

    We can't find the page you requested in this location.

    The story may have moved or expired.

    You may wish to:

  • » More on the Capitol Alert blog


May 2013

Sun Mon Tue Wed Thu Fri Sat
      1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31  

Monthly Archives