Rose Institute Fellow Dr. Steven Frates Quoted in Reuters Article
Rose Institute Fellow Dr. Steven Frates was quoted in a Friday Reuters article (picked up by Forbes online) about Calpers, America’s biggest pension fund. The article discusses how Calpers has been doing during the financial crisis, and Dr. Frates commented about Calpers’ relationship to taxpayers.
‘Calpers’ responsibility, broadly speaking, is to the taxpayers,’ said Steven Frates, senior fellow at the Rose Institute of State and Local Government. ‘When the check comes due, those are the people who pay it.’
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How sad that a senior fellow at your institute can be so far off base.
Here are the facts: For every dollar paid out by CalPERS in pension benefits, 75 cents comes from investment returns, 13 percent from employee contributions and only 12 cents from the taxpayers. If anything, CalPERS has more responsibility to insuring that employee contributions are wisely invested than it does to taxpayers.
by StevefromSacto
on 27. Oct, 2009
I think Mr. StevefromSacto, you miss the point. Assuming your numbers are correct, yes employees are contributing a greater share. But the reality is that it is ultimately the taxpayer that will be on the hook for any shortfall between promised benefits and benefits the fund is able to pay about based on actual investment returns. Employees are certainly contributing to their pension, but the employer is providing the ultimate guarantee, which may require them to go back to the taxpayers in the form of higher taxes in order to meet that guarantee.
by David Hicks
on 03. Nov, 2009