Tags: University | California | Pension | Funds | 20 Billion | Shortfall

Report: U. of Calif. Pension Funds Face $20 Billion Shortfall

Wednesday, 01 Sep 2010 10:48 AM

A new report says the pension system for the University of California is $20 billion short of what it needs to meet its obligations to retirees.

The report has sparked an administrative task force to look at increasing contributions made by the university and employees, raising the minimum retirement age for new hires and reducing some benefits, The Los Angeles Times reports.

UC President Mark Yudof says consequences will be terrible if the problem is not tackled quickly, the Times reports.

"If we do nothing, in four years, the University will be spending more on retirement programs each year than we do on classroom instruction," Yudof wrote in a recent letter to UC employees.

The shortfall appears to have been triggered some 20 years ago, when the university and its employees quit paying into the retirement fund because the fund was believed to have more than enough money.

The university and employees resumed payments this year, but concerns about the possibility of unfunded pensions and post-retirement healthcare continue, according to the report.

Some are the proposed fixes are raising employee contribution amounts from their current levels of two and four percent to five and 10 percent, prohibiting new employees from retiring before they are 55 and paying smaller pensions based on years of service.

Rollbacks in pension benefits would require agreement from labor unions.

According to the San Francisco Chronicle, CalSTRS, California's pension fund for the state's 848,000 teachers and their families, has launched a $600,000 public relations campaign to call attention to the fact that the fund is underfunded.

Meanwhile, public employee pensions will need a bailout of at least $1 trillion, according to a study by Northwestern University economist Joshua Rauh.

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A new report says the pension system for the University of California is $20 billion short of what it needs to meet its obligations to retirees. The report has sparked an administrative task force to look at increasing contributions made by the university and employees,...
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2010-48-01
Wednesday, 01 Sep 2010 10:48 AM
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