Gov. Jerry Brown on Wednesday urged CalPERS, the massive public employee pension fund, to move more quickly to address the increasing life expectancy of state employees, saying longer-lived retirees will drive pension costs up $1.2 billion a year.
In a letter to Rob Feckner, president of CalPERS' board, Brown called "unacceptable" a CalPERS staff recommendation he said would have the board "wait two full years before taking action." Fund staff previously raised concerns about the cost of raising contribution rates, recommending increases not take effect until 2016.
"Since CalPERS last faced this issue in 2010, there have been dramatic changes in life expectancy: by 2028, men retiring at age 55 are projected to live an average of 2.1 years longer and women 1.6 years longer," Brown said in his letter. "For the state, these changes mean that pension costs will be much greater than previously thought and state costs will increase $1.2 billion annually - about 32 percent greater than today."
The Democratic governor called on the board to "fully phase in the increased costs within three years."
"No one likes to pay more for pensions," he said, "but ignoring their true costs for two more years will only burden the system and cost more in the long run."
CalPERS said in a prepared statement Wednesday that board members "must balance a number of factors in their decision making including the state of our financial markets, our economy and the ability of our members and employer partners to pay increased pension costs."
It said CalPERS staff will make its final recommendation about actuarial assumptions available next week.
PHOTO: Gov. Jerry Brown speaks to reporters at a news conference at the Capitol on Sept. 9, 2013. The Sacramento Bee/Hector Amezcua