Could the Governor’s 12-Point proposal reduce benefits for current retirees or reduce anticipated benefits for members?

Ask Jack Jack Ehnes

There are two provisions that may impact current retirees or reduce anticipated benefits for members and one that deals with contributions paid by members.

First, if adopted as written, under the Governor’s 12-Point proposal current and retired members acting in their official capacity who are convicted of a felony would be subject to forfeiting their benefits.

Second, the Governor’s proposal calls for the elimination of future purchases of so-called “air time” (additional retirement service credit for time not actually worked) for all current and future employees.

Lastly, the proposal states also that the “annual normal pension costs should be shared equally by employees and employers” and that employee contribution rates would be “at least 50 percent of the annual cost of their pension benefits.” This provision could require members to pay at least 50 percent of the normal cost of the Defined Benefit Program which could result in an increase to approximately 8.86 percent for current members.

Based on the analysis CalSTRS has published, the intent of the majority of provisions appear to be directed toward future employees who have yet to enter the system.