In the statewide debate over public employee pensions, there are few numbers more misleading and misused than the average benefit for retirees of the California Public Employees’ Retirement Association.
CalPERS loves to circulate the statistic. So do politicians and unions representing workers. “Twenty-five hundred dollars a month is the average state employee pension,” state Treasurer Bill Lockyer, a member of the CalPERS board, told a UC Berkeley conference of academics and journalists last month.
As the public pension debate heats up in coming weeks, you will certainly hear that more often. Indeed, there’s a corollary number that pulls even harder on the heartstrings. When the pensions of local government employees covered by CalPERS are added in, the average pension is $2,220 a month.
It leaves the impression that the average public employee now retires after a full career into a life of poverty, living off less than $27,000 a year. That’s simply not so.
In fact, CalPERS data shows the average career public employee, who put in at least 30 years of service and retired in the 2008-09 fiscal year, collected a starting pension of $67,000 a year, or 21/2 times the advertised figure. The higher number is buried deep in the retirement system’s financial statement and never makes it to the promotional material CalPERS hands out.
A majority of these workers also receive Social Security, which could add, very roughly, about $19,000 to the annual pension of a career worker, pushing the average starting retirement for CalPERS to about $86,000 a year, or more than three times the touted number.
The pension numbers are even higher in San Jose. The average city worker who retired in the 2009-10 fiscal year after at least 26 years of service earned a starting pension of $93,200. For retiring police and firefighters, that number was $119,000; other retirees started with a pension of $63,500. San Jose city workers do not participate in Social Security.
So how does CalPERS come up with $27,000 a year?
As government leaders argue public employee pension reform, it’s essential that we have an honest debate with useful numbers. Retirees who left work under more reasonable retirement benefits before 1999 are not relevant. The debate should be about the generous pension formulas currently in use.
Moreover, averages that lump together five-year workers with 35-year employees are not helpful. Those who worked less than a full career in the public sector should have other sources of retirement income as well. Taxpayers should not be on the hook for their full retirement.
It’s important to keep in mind that most of those taxpayers, who contribute the bulk of the funding for public employee pension systems, do not enjoy retirement benefits anywhere close to the public sector. They often work 35 years or more. They want to know how public employee pensions compare to theirs.
It’s time for CalPERS to give them a direct answer.
DANIEL BORENSTEIN is a Bay Area News Group columnist. Reach him at 925-943-8248 or dborenstein@bayareanewsgroup.com.
