Posted By thestatedtruth.com on August 31, 2010

What a travesty………..how do seemingly smart minds create such stupid problems?   “If we do nothing, in four years, the University will be spending more on retirement programs each year than we do on classroom instruction,”

The University of California retirement system faces a shortfall of more than $20 billion, according to a new report. 

The panel, which released its report publicly Monday, proposed such changes as increasing contributions made by the university and employees, raising the minimum retirement age for new hires and reducing some benefits.

Part of the problem with the retirement fund stems from a decision 20 years ago when UC and its employees stopped paying into the retirement system because it was believed to be overfunded, officials said. The university and employees resumed payments this year, but now drastic changes will be needed.

The recommendations include raising the amount, over the next two years, that employees and UC must contribute to pensions, from the current 2% and 4% of paychecks, respectively, to 5% and 10%. In other suggestions, new employees would not be allowed to retire and receive a pension until they reach the age of 55, up from the current 50, and they also could receive smaller pensions based on their years of service than current employees.

Be  warned, there will be terrible consequences if the problem is not tackled quickly. “If we do nothing, in four years, the University will be spending more on retirement programs each year than we do on classroom instruction,”  this from a recent letter to UC employees.

Here is the catch….Rollbacks in pension benefits also would require agreement from labor unions, as has been the case with similar benefit reductions that Gov. Arnold Schwarzenegger has proposed for the State of California.

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