CalPERS Board Calls for Retirement Equity.

SACRAMENTO, Calif.--(BUSINESS WIRE)--Sept. 2, 1998--The California Public Employees' Retirement System Board of Administration is calling on the California Legislature and the governor in the next legislative session to provide "retirement equity" for CalPERS members.

The Board resolution was adopted in recognition of CalPERS, through better than expected investment earnings, saving the state more than $750 million this fiscal year in employer contributions to the state and school employees' pension plans, administered by CalPERS.

The resolution calls on the Legislature and the governor to use a portion of the savings generated by CalPERS to:

     --   Support legislation to remedy the inadequate retirement
          benefits of state workers currently participating in the
          Tier 2 CalPERS retirement plan by providing a better
          retirement plan for those employees or allowing all current
          and future employees the option of enrolling in the more
         attractive Tier 1 CalPERS plan.

          Since 1991, all state workers have been mandatorily assigned
          to the inferior Tier 2 plan. The Tier 1 plan provides a
          better retirement benefit but also requires employee
          contributions - Tier 2 does not.

     --   Support legislation to remedy the current inadequate and
          inequitable cost-of-living adjustment for state employees in
          the Tier 1 plan by increasing the annual COLA from the
          current 2 percent.

     --   Support legislation to provide relief and flexibility in
          CalPERS employee contribution rates for state employees,
          either by lowering the fixed employee contribution rate or
          giving the CalPERS Board control over the employee
          contribution rate.

     --   Support legislation that would remedy retirement benefit
          inequities that may exist within the CalPERS school and
          public agency membership.

     --   Support legislation to provide an increase in the
          cost-of-living allowance, or a one-time benefit increase,
          for all CalPERS retirees.

"Many CalPERS members are not getting a fair shake relative to their retirement benefits," said CalPERS Board President William D. Crist. "In our defined benefit system, the CalPERS Board does not have the authority to set benefits. Only the Legislature and the governor, in conjunction with collective bargaining, can set state employee retirement benefits. In light of the savings to employers recently generated by CalPERS, we believe our members should receive benefit improvements and other equity adjustments."

"It is an issue of fundamental fairness," said Michael Flaherman, Chairman of the CalPERS Benefit and Program Administration Committee, where the resolution was introduced and debated. "If the state and other public employers are benefiting from our excellent investment returns, our members should also benefit."

The Board resolution calling for retirement equity came in response to a request from the Association of California State Attorneys and Administrative Law Judges. Several Board members who supported the resolution noted that state employees have not had a cost of living wage increase since January 1995.

CalPERS, with assets of $140 billion, is the largest public retirement system in the nation, managing pension and health benefits for more than 1 million California public sector workers and their family members. For more information about CalPERS, visit the system's Web site at www.calpers.ca.gov.

    CONTACT:  CalPERS
               Edd Fong or Pat Macht, 916/326-3991