Los Altos, Calif.- More bad news for taxpayers, as a new study says the "California Public Employee Retirement System" can't afford to pay employee pensions... and it's going to get worse. The study said as more "baby boomers" retire, the state faces an even bigger financial burden and you're footing the bill.
A Stanford think tank known as California Common Sense, released the study on the state's non pension benefits this week. Non pension benefits are the fastest growing and unfunded liability to California. Also health care benefits is the largest financial burden and as 'baby boomers' begin to retire...they're numbers are increasing and they're living longer which means more money is needed now or the State and City retirees won't have their benefits when they need it later. The scary fact is some cities haven't even begun to pay into their retiree benefits.
The study also said if the state doesn't act now...retiree benefit accounts will eventually take money from essential state services such as public safety and education.
Here's what the think tank analysis has found.....the states liability for benefits has doubled every 5 years since 1999. At this rate retiree benefits will consume the entire states budget in 35 years!
Also on a positive note, if the state starts to pay it's full contribution now and continues to do so...as determined by the Public Employee Retirement System or CALPERS...it'll save 21 billion dollars. And pre-funding these accounts now will secure more money toward future benefits payments due to utilizing investment fund growth over the years.
To solve this problem the think tank suggests the state restructure the way CALPERS pays for these long term benefits or restructure these benefits themselves. Here's how: the state should restrict eligibility for full benefits based on time worked, reduce the amount paid to healthcare costs or move to a different pension structure altogether.
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