| Saving Our DB Plans: The Battle in California
Fred Nesbitt
There is a battle underway to eliminate defined benefit plans for public employees in California that could profoundly influence pensions for public employees nationwide, according to NCPERS Executive Director Fred Nesbitt. “This is a fight for our lives,” he said. “I can't stress enough how important this is.”
Nesbitt delivered a detailed review of the California situation, which includes a proposal to implement a constitutional amendment to eliminate defined benefit plans for all government employees statewide—local, county and state employees of every pay grade. Although the amendment is unlikely to pass in the state legislature, a public referendum on the issue is possible, as early as November 8, 2005.
The current pension program has been attacked because of budget crises at every level of government, and misleading suggestions that government employees receive overly generous benefits. The governor's proposal would be to create a new defined contribution plan that would be prospective, affecting employees hired after July 1, 2007. Employees in the defined benefit plan would have the option of moving into the new defined contribution plan.
Nesbitt said that NCPERS has initiated several steps to fight the proposal:
• Developing and distributing information on why the Schwarzenegger proposal is bad public policy.
• Identifying supporting data to show why defined benefit plans are good for employees, governments, and taxpayers.
• Conducting six focus groups to test these arguments, to ensure that our message is clear and persuasive.
• Creating a public relations campaign to educate voters and lawmakers.
NCPERS has also joined a new pension coalition whose members will put their resources into the fight against the Schwarzenegger proposal.
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