CalPERS Says State Should Look before It Leaps into Privatizing Public Pensions.

SACRAMENTO, Calif. -- The following statement was issued today by Rob Feckner, Acting President of the California Public Employees' Retirement System (CalPERS) Board of Administration in response to recently announced initiatives to downgrade public pensions into a defined contribution plan.

"CalPERS has more than 70 years experience generating investment income to cover pensions. I believe it is unwise to abandon that model for a slap-dash effort to rush onto the law books a defined contribution plan that will be disastrous for everyone.

"Our investment research shows the defined contribution model will provide a meager retirement for most public workers, which today is on average only $20,000 a year, and it will cost more. Public workers will not be allowed to invest in all asset classes, and they'll pay six to seven times more in professional fees for the privilege of investing.

"It will not reduce the cost of government, in fact it will add to the costs for many years to come.

"Most sadly, it will hurt California's economy because it will put an end to any pension monies being plowed back into the California economy. More than $19 billion dollars of our pension assets are invested into real estate, private businesses and communities in California.

"We recognize and sympathize with the challenges that have been created for employers to pay their contributions following a downturn in the economy. We are working to build consensus among the employer community to reform the existing defined benefit plan method of contributions, and remain confident that with their helm, we can solve the problem without going to draconian measures.

"Clearly, ideas rooted in the concept that government should simply toss this problem over the fence to the workers and not look back is extremely short sighted and will probably cause top quality workers to pursue careers outside of public service, causing a deterioration of quality work force needed to meet the difficult challenges this state will face in the future."