Everyone should be able to retire with dignity with a pension after a lifetime of work. Productivity has increased dramatically over the last 30 years, but most of this increased income has gone to the top 1 percent of earners. At the same time, these earners in the top 1 percent have made the decisions that have taken away pensions, so most will be forced to try to work into their 70s. 401k plans have not made up the difference, as 57 percent of Americans have less than $25,000 in their 401k plans and other savings. Many will be laid off at an earlier age and be forced to live in poverty or move in with their adult children. What happened? The top 1 percent have underfunded pensions, then claimed they are too expensive and discontinued them. IBM underfunded its employees’ pensions, then converted them to 401k plans, resulting in the loss of hundreds of thousands of dollars each for many IBM employees. United Airlines went bankrupt in order to stop paying its pensions, ruining the lives of many former employees. Is the UC system following this example?
From 1990 to 2010, no taxpayer money or student fees went into the UC pension system. UC employees were assured that the pension was so overfunded that the regents actually took money out in 1991 to 1993 and even 2002 to 2003. By 2006, the regents claimed that contributions were needed again but refused to allow an actuary hired by the unions to verify this. It took five years of litigation for the UC system to allow a union-hired actuary to even get the data. What was UC system trying to hide? The union-hired actuary found a potential $1 billion in savings. Meanwhile, the state got used to not funding UC pensions despite funding CSU pensions at 20 percent of salary — compared to a 5 percent employee contribution. Has UC management displayed competence and transparency in allowing this to happen?
Who gets hurt by these changes? In the case of the UC system, executives like President Mark Yudof come out unscathed. He’ll receive an additional $230,000 per year after his five years of service. But UC workers pay more for fewer benefits. For younger workers, the system has drastically changed the rules on qualifications for retiree health care benefits. As of July 1, one’s age and years of service must equal 50 — and one must be vested — in order to avoid cuts to health care benefits in retirement. These cuts could equal one-third of one’s retirement income. For faculty and staff members hired on or after July 1, the UC system has a new retirement tier in which employees must pay a little less and get a lot less, about one-third of what some co-workers will get and about half of what others will get.
Two unions, UPTE-CWA 9119 and California Nurses Association, oppose the tiered retiree benefits and are in bargaining over these and other matters. The UC system refuses to consider any proposals from the unions.
Before the contribution holiday, the sysetm had contributed two, three and five times as much as employees contributed to the fund. The retirement benefits helped retain faculty and staff members. Now, with two tiers of retirement, why would newly hired employees spend lifetimes at the UC system for meager pensions? And if these tens of thousands of employees do not stay, how does the fund stay solvent?
The UC Regents now want UC employees to pay more and get less, an experience familiar to UC students. It’s really up to us to say no to these ongoing shifts of resources from students and workers to, yes, executives, Regents with connections to development and finance, CEOs, consultants …
Turning the tide means working together to challenge decisions and priorities that diminish our future and the future of the university and working together to preserve (and, where needed, reintroduce) decent pensions for all.
No to exorbitant UC executive pensions; yes to decent pensions for UC faculty and staff members.
Paul Brooks is an elected staff representative on UC Retirement Advisory Board. Tanya Smith is president of the Local 1 of UPTE-CWA 9119.
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