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California Moves to Cut Pension Benefits


January 12,2018

the staff of the Ridgewood blog

Ridgewood NJ, watch out New Jersey you could be next , for decades in California, a sacrosanct rule has governed public employees’ pensions: benefits promised can never be taken away.

But now the California Supreme Court has threaten to reverse that premise and open the door to benefit cuts for workers still on the job.

California Governor Jerry Brown said legal rulings may clear the way for making cuts to public pension benefits, which would go against long-standing assumptions and potentially provide financial relief to the state and its local governments.

ballooning expenses are an issue that Gov. Jerry Brown will face in his final year in office despite his earlier efforts to reform the state’s pension systems and pay down massive unfunded liabilities.

At issue is the “California Rule,” which dates to court rulings beginning in 1947. It says workers enter a contract with their employer on their first day of work, entitling them to retirement benefits that can never be diminished unless replaced with similar benefits.

It gives workers security that their retirement will be safe and predictable after a career in public service. But it also ties lawmakers’ hands in responding to exploding pension costs.

It’s widely accepted that retirement benefits linked to work already performed cannot be touched. But the California Rule is controversial because it prohibits even prospective changes for work the employee has not yet done.