California voters recalled Democrat Gray Davis in 2003. Unfortunately, one of his legacies lives on: overly generous pension packages to state employees.

The California Post reports that more than 63,000 retirees are earning six-figure pensions. That’s more than double the number in 2018, and more than 30 times the number in 2005.

There are dozens of former state employees making more than $300,000 per year, and three who receive pensions of more than $400,000.

Governor Newsom, to his credit, vetoed the bill last month. David Buchan for Ca Post

Just by way of comparison: Governor Gavin Newsom earns $245,929, and he isn’t even retired yet (even if he spends much of his time out of the state). 

This is a massive burden on the state — and especially on local governments.

Amazingly, it was a Democrat — Governor Jerry Brown — who began to defuse the pension time bomb.

In 2012, Brown pushed through pension reforms that sought to save the system from its own overly ambitious promises to state employees.

His Public Employees Pension Reform Act (PEPRA) was one of the signature achievements of his administration, and a model for pension reform nationwide.

There are dozens of former state employees making more than $300,000 per year, and three who receive pensions of more than $400,000. Getty Images

But public sector unions have tried to undo those reforms. Their latest legislature effort was AB 1383, which sought to reduce the retirement age from 57 to 55, among other changes. It passed the state legislature by an overwhelming margin, with even some Republicans voting for it.

Governor Newsom, to his credit, vetoed the bill last month.

He said: 

“I still recall — before PEPRA’s passage in 2012 — the alarming forecasts, the fierce criticism of public employees, and the growing pressure to eliminate defined benefit plans altogether. This is an era of California history I do not wish to repeat.”

But Newsom’s veto is not enough.

In the private sector, most employees save for retirement according to defined contributions — not defined benefits. 

They know how much they will pay in. They cannot know how much they will be paid out.

That’s because the market decides. And that makes sense: how can anyone guarantee what a future investment will be worth?

The State of California offers pensions with defined benefits. That’s fine in a bull market. 

It’s a disaster in a bear market, when returns head south.

California has looming structural deficits as far as the eye can see, and the last thing we can afford is a pension system that feeds fat-cat retirees at the expense of current needs.

The next governor must do better.

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