Inquiring minds are looking with mouths agape at the increase CALPERS just hit local governments with a 55% increase. But hey, it’s only for 19 years!
Gwilym McGrew of BigGovernment .com is reporting of this huge story which is actually worse than his prediction of last week (Video Proof of CALPERS Fraud). And, thanks to the internet, once again there’s video:
Last week I calculated that CalPERS would increase its pension charges to cities, counties, and the state of California over 30% to regain massive investment losses over the last decade. My initial estimate was drawn from a presentation by Kung-pei Hwang, CalPERS Senior Actuary, which I recorded mid November. My report also detailed the gimmickry that CalPERS used to hide the 50% shortfall in their planned assets. However, it looks like my estimate was way low because we now have new video of the CalPERS board stating in their own words that the costs to cities, counties and the state will increase a GINORMOUS 55% by 2013 and the increased rate will need to be in place for at least the next 19 years.
And, this will only provide a 50/50 chance of getting to where they need to be to fulfill pension obligations for municipal and state workers. In aggregate for all municipalities and the state this could equal a $4 billion a year drag on the economy of cities and counties as each spends less for local government functions. Many cities and counties are already struggling to meet the current pension costs. The new rate threatens to put many governments into serious financial trouble. For the City of Los Angeles alone this means an increase of $340 million each year in payments to CalPERS!
How are the governments going to handle this when they are already being pushed to the brink? Listen at the 57 minute and 37 second mark of this video as a board member adds up the financial hit cities and counties in California are about to take:
Click here for the video link.
Earlier in the video CALPERS admited that they did not build into the forecast that smaller government budgets will mean layoffs and/or early retirement which will further strain the pension system. Fewer municipal & state employees means less payments made into CALPERS to their already underfunded coffers. Amazingly, their financial model does not take this into account!
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