Author: Robert R. Mitchell

The Orange County appeal of the pension benefits for
Deputies was denied by the California Supreme Court.  In a careful review of the decision made by
the Appeals Court, we find the same self-serving protection that judges always
give to government employee pensions.

The issue arose because exuberant promises of high
investment returns in 1999 made pension grants look very affordable.  The OC Supervisors in 2001 approved the
changes, and affirmed them in renewals of the bargaining agreement in 2003,
2005 and 2007.  But in 2008, the new OC board
looked at the issue as one granting a huge benefit that was not properly funded,
a $100 million unfunded grant of deferred compensation for services already
provided.

About 200 local agencies in California have
increased pension benefits this year, as noted in pensiontsunami.com. 
How these benefits are eventually paid is a concern to California voters. 
As an actuary who has worked on pension formulas for forty years, I know that
actuaries are the key figures in making that decision.

The pension plan advisors and actuaries should be
held to a higher standard than in the past.  Responsible public
disclosure from actuaries should indicate (in advance) the financial consequences
on public pension plans for decisions made on benefit changes. Lack of such
transparency has put our current pension system in jeopardy.

Here are three ideas for change:

1.    Employers
should be held to a standard that promises (benefits) must be paid for (funded)
during the period that employees provide services.