State’s portion of CalPERS pension bill will be less than expected

California is getting a slight break on its pension bill for the upcoming fiscal year.

The California Public Employees’ Retirement System said Tuesday that the state’s contribution for the fiscal year starting July 1 will be $170 million less than previously estimated.

The biggest factor in the savings is an agreement by state worker unions to hike employees’ contributions to their own retirement plans. Employee contributions are rising 2% to 5%, CalPERS said, and in the aggregate are forecast to total $1.3 billion next year.

Lower-than-expected salary raises and smaller cost-of-living increases also helped reduce the pension burden on the state budget.


As a result, the state’s total contribution to CalPERS will be $3.5 billion instead of $3.7 billion, the pension fund said.

“Pensions are a shared responsibility, and our members in some cases are paying half the normal cost of pensions,” said CalPERS board President Rob Feckner.

The slight reduction in annual pension costs is unlikely to dampen an increasingly hot debate over the future of state and local government pension obligations.

Gov. Jerry Brown is working on a proposal to reduce pension costs, a plan he hopes to present to Republican lawmakers as part of ongoing budget and tax-increase negotiations.

Meanwhile, proponents of an initiative that would convert state retirement benefits to a 401(k)-type plan are organizing to put a measure on the ballot some time next year.