Pension Reform - the San Francisco Treat

There is a new catch phrase, and it is pension reform.  Pension reform is like tort reform, who's primary purpose it to make it harder for people injured by neglect or even deliberately faulty designs to hold businesses accountable.  Pension reform is another example of kick em when they are down.

The City and County of San Francisco will have two competing pension reform measures on the ballot, each of them trying to outdo the other on screwing city employees.  Before I describe them, let's talk a little about the bargain that city and county workers everywhere accept when they go to work.

• You will accept less pay than your counterparts in private industry.
• You will work in a bureaucracy that whose rules and working conditions will always lag those of private industry.  Change takes so long that you will always be using obsolete practices.
• You will be led by managers who's sole qualification is that they are a friend of the mayor a supervisor or the son or daughter of a somebody's big campaign contributor.  And they will never have to deal with the consequences of their decisions because:
• Every few years someone new is elected and all those managers will change, and you start all over again trying to explain to them what it is the department is supposed to do.

In exchange, you will get decent benefits and a decent pension.  The pension is a defined benefit plan, meaning that how much you will receive is based upon a formula that factors is the age at which you retire, the number of years you worked, and what you were paid while you worked.  It allows you to plan your retirement, because you can know what your income will be. 

So now that you know the terms of the bargain, let's see what our politicians have come up with.

First, they will increase how much of your salary they will take for to help cover the cost of your pension.  The more you make, the higher percentage they will take.  This could actually result in a raise reducing your take home pay.

Second, they will no longer count all of your salary when figuring your pension.  For a long time overtime has been excluded from most plans, and with good reason.  You don't want to encourage people to game the system and tack on a bunch of overtime in their last year or two of employment to goose up their pension.  But under these plans, you stop accruing benefits after a specified number of hours each year.

Third, they will modify the benefit calculations, so that the amount of your income that the pension will replace when you retire will be less.

Fourth,  there will be some cost of living adjustments for retirees, widows, and orphans that can just disappear.  If the Retirement Board and the actuaries decide there is not enough money in the trust fund to increase your pension a specified percentage, not only will they not pay it, but they will take away the cost of living adjustments they have been giving you over the years.  The adjustment is specified at 3-1/2 percent.  If there is enough money in the trust fund to pay only a 3 percent increase, they not only will not pay any increase, but they will take away all the increases from previous years.  This could be an unexpected pay cut of 10, 20 percent or more, depending upon how long you have been receiving it.

Finally, when times are hard, and the city is asking you to take unpaid time off, and pay cuts (while of course the politicians are not cutting their own pay), then they will raise the amount you must contribute to your pension.  So first they cut your pay, and then they take more of what's left.

There you have it, pension reform in a nutshell.