“Employee Share” of Government Workers’ Pension Contributions Often Paid by Taxpayers

The San Jose Mercury News reports that government workers’ so-called “employee contributions” to pensions often are covered by the taxpayers, not the employees.

The newspaper cites the case of Alameda County's top-paid public official, county administrator Susan Muranishi, who received $462,000 in gross pay last year. Taxpayers contributed an additional $118,000 to her retirement plan, and then “also picked up the bill for something Muranishi was supposed to pay: the $43,000 ‘employee’ contribution to her pension.”

This is called the “pension pickup,” and it is a perk included in many government employee contracts. Bay Area taxpayers footed the bill for more than $221 million last year for the “employee share” of 63,000 public workers’ pension contributions. At least 29 Bay Area public employees received pickups of more than $20,000 last year.

The Mercury News found that at least 117 public agencies picked up a portion of their employees’ retirement contributions in 2012, thus negating the intent of the employee contribution – to have employees share the burden of paying for their lucrative pensions.

A state law approved last year bans agencies that belong to the California Public Employees’ Retirement System (CalPERS) from offering pickups to anyone hired after January 1, 2013, and the state retirement system for teachers has never allowed the practice.

“That hasn't stopped agencies such as BART, the Association of Bay Area Governments and towns such as Portola Valley, Scotts Valley and Hollister from lavishing more than 99 percent of their employees with pension pickups of 100 percent,” the Mercury News reported. “Last year, BART spent $17 million covering what employees were supposed to be contributing to their pensions.”

The number of government workers across the state who receive a pickup remains unknown, as CalPERS doesn’t track the figure. (Source: San Jose Mercury News, June 24.)

California Tax Foundation   |   1215 K Street, Sacramento, CA 95814   |   916.441.0490   |   foundation@caltax.org