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Most California public workers and retirees are feeling a little better about their pensions, but their bosses are very worried.
A new survey by the California Public Employees’ Retirement showed a steep drop in confidence in the $355 billion pension fund among government executives.
Fewer than half of the city managers and other senior government leaders who replied to the annual CalPERS survey said they felt confident that their retirement money was safe, a decline of about 15 percentage points from last year.
The results echoed a February report from the League of California cities that said rising pension costs were becoming “unsustainable” for some local governments.
“Our foundation is rocky at best,” said Dane Hutchings, a lobbyist for the League of California Cities, said at Monday’s CalPERS Board of Administration meeting. “It’s crunch time, and quite frankly, we simply cannot stand another market slowdown or substandard returns.”
CalPERS conducts an annual member survey to gauge the concerns of the 1.9 million public employees and retirees who rely on it for their retirement income and health care. It distributed about 110,400 surveys this year, and about 10,800 people responded.
Overall, CalPERS participants felt better about their retirement security this year than they did in the 2017 survey. They expressed more confidence in CalPERS across a range of questions about customer service, communication and retirement security.
Last year’s survey unfolded just after CalPERS slashed the pensions it pays to about 200 former workers of two small agencies after their employers quit paying into the fund. The results reflected greater anxiety among public employees and retirees. About 3,000 more people responded to last year’s survey, too.
The new survey comes as local governments adjust to climbing pension fees. CalPERS in late 2016 acknowledged that it expects to earn less money over time from its investment portfolio, a decision that required its member agencies to kick in more money to fund the pensions of their workers.
By 2024, cities anticipate that they will spend an average of 15.8 percent of their general fund budgets on pensions, up from an average of 8.3 percent today, according to the League of California Cities survey.
The CalPERS survey results also alarmed George Linn, president of the Retired Public Employees Association of California. He maintains that the system is sound.
“We need to find a way for this investment committee and the investment department and the public relations department to do better to convince our stakeholders that the (pension fund) is safe,” he said.
CalPERS has about 70 percent of the assets it needs to pay all of the benefits it owes to public employees and retirees. CalPERS has a plan to gradually become fully funded, and it reported in February that recent changes are yielding a more stable outlook.
Still, budget hawks and retiree advocates worry that a recession could cripple the system.
“We need as much money as possible to ensure that we can take care of our public employees,” Hutchings said.