CalPERS headed for a cliff?

29 Oct

From Chico News & Review 10/25/2012

“The California Public Employees Retirement System (CalPERS) has made a disturbing announcement for many of its long-term-care clients.

CalPERS has proposed an 85 percent premium increase for 115,000 of its 150,000 long-term beneficiaries, according to the Sacramento Business Journal. Earlier this month, CalPERS officials were considering a 75 percent premium hike, which organization spokesperson Bill Madison called ‘a work in progress’ at the time.

The raised premiums, which would take effect in 2015 and be phased in over two years, are in anticipation of budget shortfalls in the future. Unlike its pension-benefits program, CalPERS’ long-term program is not funded by taxpayers.

‘At current course and speed, we would not have enough money … to pay anticipated claims,’ said CalPERS deputy executive officer Ann Boynton.”

I didn’t know CalPERS offered “long-term-care” insurance. What a scam. They take these premiums fully expecting you to DIE before you collect.  Read more below, from the CalPERS press site.

CalPERS site:

Press Release

October 17, 2012

External Affairs Branch
(916) 795-3991
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
Contact: Bill Madison, Information Officer


CalPERS Approves Long-Term Care Premium Increase

Three alternative plans offered to ease impact on policyholders

SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) Board of Administration today approved an 85 percent premium increase for early purchasers of its Long-Term Care (LTC) Insurance Program policies. The increase, to be spread over two years, is being implemented to help stabilize the Program’s underlying Long-Term Care Fund and will take effect July 2015. Members who opt to cover the increase in a single year will pay only 79 percent.

Policyholders affected by the increase purchased two types of policies between 1995 and 2004: policies with lifetime benefits with inflation protection, and policies with lifetime benefits without inflation protection (California Partnership policies will be excluded).

The premium increase is necessary to offset the effect of higher-than-expected claims, lower-than-expected investment income, the Board’s adoption of a more conservative LTC Fund investment mix, and a lowering of the Fund’s investment discount rate to 5.75 percent to align with the more conservative investment portfolio.

The Board also approved three new optional alternative benefit plans that will provide the affected CalPERS LTC policyholders with options for relief from the financial impact of the 2015 rate increase. These new alternatives will allow policyholders to avoid further premium increases by converting to policies that will still provide adequate protection and possibly lower their premiums.

“We took great care to listen to the concerns of our policyholder constituent groups and weighed staff proposals for these options carefully before making our decision,” said Board President Rob Feckner. “We are taking these actions to ensure the sustainability of the Long-Term Care Fund and the availability of benefits for our policyholders.”

Affected policyholders will be given the opportunity to convert their policies to these new options in the spring of 2013. The policy changes will take effect July 1, 2013. View a list of the proposed new policy conversion options (PDF, 87 KB).

“We feel the plan options we will offer our policyholders make this a win-win situation, especially for those with lifetime benefit policies,” said Priya Mathur, Chair of the Board’s Pension and Health Benefits Committee. “With the average length of stay in a care facility a little over three years, we think the 10-year conversion option will provide more than adequate coverage when our policyholders need it.”

The CalPERS Long-Term Care Program began in 1995 and currently has more than 150,000 members and approximately $3.6 billion in LTC Fund assets. The LTC Program is a voluntary, self-funded, not-for-profit program funded entirely by policyholder premiums and investment earnings.

CalPERS is the nation’s largest public pension fund with approximately $243 billion in assets, providing retirement benefits to more than 1.6 million State, public school, and local public agency employees, retirees, and their families, and health benefits to more than 1.3 million members. The average CalPERS pension is $2,332 per month. The average benefit for those who retired in the fiscal year that ended June 30, 2011, is $3,065 per month. For more information about CalPERS, visit        

                                                                                                                                                                                                      ### end of press release ###

There it says, “The premium increase is necessary to offset the effect of higher-than-expected claims, lower-than-expected investment income, the Board’s adoption of a more conservative LTC Fund investment mix, and a lowering of the Fund’s investment discount rate to 5.75 percent to align with the more conservative investment portfolio.”

“higher than expected claims” – that means, people are actually living to collect! How could they NOT have expected that? They sell you insurance, and then they don’t provide for you?  Again I will say, what a SCAM.

lower than expected investment income” – yes, like the pensions, they’ve gambled this fund on the stock market, and where they predicted they’d be getting somewhere between 7 and 20 percent returns, they’ve been lucky to get ONE PERCENT. They’ve lost millions.

Which led to “the Board’s adoption of a more conservative LTC Fund investment mix” – oooo, I’ll bet!

“”and a lowering of the Fund’s investment discount rate to 5.75 percent to align with the more conservative investment portfolio.” This means, CalPERS clients will pay more toward their own benefits, for the “long-term-care” coverage anyway.

These articles are like boxes within boxes – every time I read more, I have more questions than I had before. See this link, here above – this article tells how  CalPERS got public employees to buy into this scam by offering them a “discount rate.”  Suckers – anybody who thinks they can get something for nothing deserves to be had.   How could they believe they could pay so little, and then be taken care of indefinitely in some rest home? How could they believe that the stock market, which has behaved very poorly and been outrageously volatile these last ten years, would pay consistently enough to float thousands of retirees who aren’t paying anything?

But it’s not just the employees – we, the taxpayers, are also  the suckers here. A lot of public employees get “long-term-care” paid for by their employer. I haven’t seen the city of Chico contracts – have you? I’m guessing we pay for “long-term-care,” but I’d have to see the contracts. 

This is part of the perfect pension storm. CalPERS is in trouble, they’re just trying not to let on. Right now they are hitting lower level employees, like my friend who earns less than $40,000 a year with Butte County, to pay their own “employee share.” Sounds like no big deal, huh? Well, it’s the beginning of a big deal, so watch it. The lower level county employees – “classified staff” – those making less than $50,000/yr – have been TOLD over the last year that they would be paying their own 7 percent share of their benefits. That’s the deal at the county, at the city it’s 9 percent. Then the employers pay a matching amount – 7 percent for the county, and 9 percent for the city.  I don’t know all the details perfect, but here’s the bottom line – City of Chico employees, with the exception of the fire department,  pay only a small portion toward their health benefits, and NOTHING on their pensions. 

And the other thing is, that’s only 14 and 18 percent. The rest of the pension premiums are riding on the stock market. And the market is not paying fast enough to keep up even with the pensions currently being paid out, not to mention the pensions that will be paid to our current employees. So Jerry Brown is trying to get CalPERS to raise the payments – whether the employees pay them, or WE pay them, they’re going to have to be paid. We’re talking BILLIONS in unfunded pensions.  

The problem – the giant defecating elephant – is that thousands of people  currently work for public entities, thinking they will be taken care of for life having only paid a couple thousand dollars a year toward that care. The average premium, according to Cal Pers, is $2500 a year, while the average pension benefit payment is $3200 a month. How could that possibly be sustainable? 

CalPERS convinced the public employment sector, as well as our governor and our  legislature, that they could sustain these outrageous pensions with only 14 – 18 percent of the premium being paid by the employee/employer. They promised they could make these crazy, 20 percent returns on the stock market, and our corrupt and lazy legislators gave them the go ahead to do it. 

The city of Chico does not have to remain on this road to Perdition. The contracts are being hashed over right now. Some of them are already done deals – with all the perks and benies, and even some raises! How nice! But there are still contracts on the table. We must lean on our elected leaders to make our employees pay more of their “share.” Whoever you vote for in this election, take some responsibility for them – like you would your own child. When your child does something wrong, you have to point it out, you have to tell them it won’t be tolerated – not only by you, but more importantly, not by society at large. We have to take our elected officials off to the corner too, tell them when we feel they are not doing their jobs, not listening, not taking correct action. You can tell them sweet or sour, but you should tell them. We need some sort of benefits reform HERE IN CHICO. We don’t have to continue like helpless lemmings off into the Pacific with Governor Moonbeam and his horde. 


6 Responses to “CalPERS headed for a cliff?”

  1. Joseph October 30, 2012 at 9:06 pm #

    There’s no doubt CalPERS is a giant ponzi scheme and the taxpayers are going to get jammed.

    But some of those CalPER’ers are going to be mighty disappointed before it’s all over.

    And speaking of schemes and schemers did you see who came to Chico yesterday?

    That’s right, the Old Brown Buzzard.

    And he was bribing college students to vote for his tax increases.

    And guess who was standing beside him while his beak was squaking all this.

    Yup, the head Schwabista!

    Scwab should be arrested for being an accessory to bribery.

    Well, I got my ballot in the mail today, and I can tell you I voted against all the Sandinistas…er…sorry…Schwabistas and their schemes.

    I voted for Coolidge, Morgan, Evans and Toby. I hope they all win and do a good job on the council, but to tell the truth I was more voting against the Schwabistas then for anyone.

    Another couple years of the Schowabistas and their Scwabola and this city will be bankrupt.

    And to top it off you won’t even be able to get a damn grocery bag or if you do you will have to pay five or ten cents per bag plus tax. And God only knows what other ways they will try to micromanage our lives.

    But if you look at Agenda 21 you can probably get a good idea of where they are headed.

    And I voted against that bond measure and the phone tax and even the tax to remove abandoned vehicles. What a scam that is. The county should just let private companies or individuals remove the cars and sell them for scrap instead of taxing us every year in our vehicle registration. They try to squeeze every dollar out of you and the idiot voters go along.

    • Juanita Sumner October 31, 2012 at 6:09 am #

      I was just telling my husband the other day, CalPERS is a “pyramid scam”. He said “Ponzi”. What’s the difference, do you know? They sure sound similar – you get people to give you money based on the idea that they will get money from new conscripts. Public employees are not forced to join the union, but in the case of Chico PD, they are forced to pay union dues whether or not they want to be members – it’s in the contracts. Right now the city takes those dues right out of an employee’s paycheck, whether or not they agree to be a member. That’s why I voted for Prop 32, but you’ve seen the propaganda smear they’ve done, with that money they’ve been taking from employee’s paychecks. The “Yes on 32” campaign was not allowed to take money out of people’s paychecks to pay for their campaign, so you didn’t hear a peep.

      Thursday I’m going to be seeing Ann Schwab at the Sustainability Task Force meeting, 3:30, city hall, first floor, across from the Finance Department. I’ll have to ask her if Budd and his kid are covered on her $21,000 city-paid insurance package. I’ll let you know what she says.

      Thanks Joseph.

      • Joseph October 31, 2012 at 10:10 am #

        I thought a Ponzi scheme and pyramid scheme are the same.

        I voted for 32 also. The government employee unions have thrown everything but the kitchen sink at that one.

        Good luck trying to get an answer out of Ann on Thursday and don’t step in any Schwabola.

      • Juanita Sumner November 1, 2012 at 7:05 am #

        The only difference I’ve been able to find is, “Ponzi” was named after the first guy who did it, like 100 years ago. “Pyramid” scams were popular in the 1970’s. It seems to me sometimes the media just changes the names of stuff to make it sound like they’ve uncovered something new. Maybe somebody can enlighten us.

        A screwing, by any other name, still stinks.

      • Joseph November 1, 2012 at 11:30 am #

        So what did the head Schwabista have to say?

      • Juanita Sumner November 2, 2012 at 4:39 am #

        unfortunately, she didn’t have the decency to show up at her own meeting. I’ll fill you in on the details tomorrow – right now, I’m getting ready to go to the Great Debate – out to be interesting. The topic is “taxation”.

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