Pension Promise

Re “Lawmaker Seeks to Privatize State Pensions,” Dec. 5: Assemblyman Keith Richman’s plan to help tackle our state’s budget woes by privatizing public employee retirements is another assault on the working families of California. In the debate between defined-benefit retirements, which guarantee a set monthly amount for life, versus defined-contribution plans, which give the individual greater control over investments but force workers to shoulder the risk when returns fail to meet expectations, several important aspects were missed.

Lost was any real discussion of where the money comes from to pay public employee pensions. In most cases, approximately 85% comes from a combination of employee contributions and investment income earned by the pension fund, leaving only approximately 15% to be paid by the employer. Another mostly absent but important aspect is the windfall profits that converting from defined-benefit plans to defined-contribution plans would create for the private fund managers already lining up to get a piece of the action managing these employees’ new, private portfolios.

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Perhaps in a time of growing corporate scandal and shrinking employee rights, we should be seeking to protect or even expand secure retirements, not eliminate them.

Brian C. Brooks

President, Calif. Assn. of

Professional Employees

Pomona