Longer life expectancies for retirees may add $9 billion to the funding gap for the California Public Employees’ Retirement System, the largest U.S. public pension, Governor Jerry Brown said today.
Brown, a 75-year-old Democrat, urged leaders of Calpers to account for the higher costs in their calculations of the $275.2 billion pension’s unfunded obligations rather than wait two years as their staff recommended, Brown said in a letter to Rob Feckner, the board president.
“No one likes to pay more for pensions, but ignoring their true costs for two more years will only burden the system and cost more in the long run,” Brown said.
By 2028, men who retire at 55 are projected to live 2.1 years longer and women 1.6 years longer, boosting the state’s costs by $1.2 billion a year, or 32 percent, the governor said. The unfunded liability would rise by $9 billion to $54 billion, he said.
A decision on future contribution rates could come Feb. 18, when a report on actuarial assumptions is presented to the Calpers board, said Rosanna Westmoreland, spokeswoman for the Sacramento-based fund.
“Our board 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,” Westmoreland said in a statement.
A two-year delay in changing assumptions would add $3.7 billion to state costs over 20 years, Brown said.