Looking for the future of public DB plans? If you use the example of America's most populous – and economically challenged – state, Tuesday's news regarding drastic pension reform plans in California should put everyone on notice.
And according to the many critics of the plan proposed by Democratic Governor Jerry Brown and his Democratic Legislature, it's a prescedent-setting move that may spread to systems in other states. And have some spin-off effects to the private DB world, suffering major issues of its own.
After a summer of debate that's seen several California cities severely limit their own municipal pension plans and restrict benefits – not to mention others that have declared bankruptcy, partially based on their pension plan costs – Brown's proposal suggests putting a $110,000 cap for the salary employee pensions would be based upon, as well as boosting the retirement age to 67 for employees hired after Jan. 1, 2013, except those working in public safety positions.
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