June 26, 2007

New Pension Initiative Proposed

Former Assembly Member Keith Richman has submitted a new proposal for pension changes. The new initiative is at the Attorney General’s Office for title and summary prior to being sent to the Secretary of State for approval to be circulated.

The new proposal would reduce the defined pension benefits for future California public employees. For new educators, it would change STRS normal retirement age from 60 to 67, use a five-year average compensation for determining final compensation, rather than the current one year or three year average, the 2% of final compensation for each year of service at age 60 would change to 1.5% times years of service (and allows for less than this percentage for early retirement) and would prohibit any retroactive application of retirement benefit formulas.

The practical effect would be to freeze the current retirement benefits for current STRS members. The fiscal effect would be a significant savings to the pension funds and probably higher salaries to replace the lower retirement benefits for new hires.

Opposition already is being generated to this proposal.

Please contact me if you have any questions at 916.441.3300 or dwalrath@m-w-h.com.

~Dave Walrath