| Efforts to Eliminate Defined Benefit Retirement Plans in California
Ed Harding and Hal Danowitz attended a briefing on the impact of the proposed Assembly Constitutional Amendment (ACA) by Assembly Member Richman to prohibit employees of public agencies from enrolling in defined benefit (DB) retirement plans, and instead provides for only a defined contribution (DC) plan for public pension or retirement systems. It would be effective after July 1, 2007 . While it looks like this amendment will not pass out of the Legislature, the Howard Jarvis Taxpayer Association is proposing a ballot initiative that will do the same thing.
If the voters pass this initiative it will mean that our retirement system will close to new members after July 1, 2007 , unless the voters of Los Angeles , by a 2/3 vote, elect to keep the current system.
While our current monthly benefit and yearly COLA will not be affected for current retirees, it would have an adverse impact on the overall financial stability of the retirement system. Extra benefits such as increases in health care costs may not be funded and will have to be paid for by the retiree. The DC plan will not provide for either disability benefits or death benefits.
Investment policies that have made our system strong would have to be modified because no new members would be putting their retirement money into the fund.
Late News: The Governor has backed down on his plan to put this pension reform before voters in a special election this year, but he plans to bring it back next year after some revisions.
Hal Danowitz
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