Defined Benefits

The second-largest U.S. city relies on an overly optimistic forecast of 7.75 percent annual returns for its pension fund, causing the gap between available assets and obligations to widen, according to the report by the L.A. 2020 Commission.

The proposals were quickly dismissed by Detroits emergency manager, Kevyn Orr, who said any sale would not only kill a proposal to pump $816 million into the citys underfunded pension systems, it would also hurt residents.

The new deal would increase to $916 million the amount the plan would contribute to reduce cuts to retiree benefits.

A study found that in general, new Calpers members need to save between $373 and $1,480 more each month or work 2.5 to 5 years longer to retire with the same income as members hired before the pension reform act.

Government agencies need to find new ways to encourage workers to remain in their jobs longer so that the massive wave of baby boomer retirements doesnt overwhelm the system.

In the Calpers case, S&P and Moodys base part of their arguments on a California law that they say protects them against retaliation for expressing opinions.