grapes


We are in a time of continuous attacks on defined benefit (DB) pensions and public retirees. That is what Sonoma County has and what most public agencies have. It means you and employer pay into your retirement fund over the years that you are working and then you are guaranteed a monthly pension for the rest of your life. Private sector employers used to also offer DB pensions but most have changed over to what are called defined contribution (DC) pension plans or 401(k) plans. These differ from DB plans in a number of ways; most notably, the employee/retiree makes the decisions around investment options and bears the risk if they do not pan out. In many cases, the employer does not contribute to the plan. In Sonoma County, our Deferred Comp plans are very similar to 401(k) plans.

Research shows that 401(k)s have failed to provide retirement security, and yet, public agencies like Sonoma County and the State of California, are talking about hybrid plans - decreasing their DB pensions and increasing retiree 401(k)s. History shows this is not a wise choice and we want to provide some infomation so you can challenge some of the statements that are being made in the press or even by your neighbors or family or social groups you belong to.

The Retirement Security Committee of CRCEA (California Retired County Employees Association) has been researching this topic for several months and has published a paper which refutes many of the claims being made. You can see the full paper by clicking on Transitioning to 401(k)s - A Train Wreck in the Making.

We have also produced a "quick facts" on 401(k)s which gives much of the relevant information related to the failure of 401(k)s and the differences between them and DB plans, but gives it to you in a more concise way than what is in the full paper. We hope it will give you information so that you can respond to some of the attacks on our current pension plans. We encourage you to use this information to respond to articles in the newspaper; to contact the Board of Supervisors; and to discuss it with groups you may belong to.

Most of the public just sees the hype in the papers and doesn't really understand how DB pensions work - that both the employer and employee pay into them and that 65-70% of the actual pension comes from interest on investments on the pension fund.

They also don't realize that only 2% of retirees in Sonoma County are in the $100,000 club. The majority receive less than $2,000/month or $24,000 per year.

We hope that providing you with accurate information about pensions will encourage you to make your voice heard in your community. While the pensions of current retirees cannot be cut, making changes to the pension funding can affect our chances of ever getting COLAs. It is important not to be complacent thinking we have ours; we need to act to preserve DB pensions because it is good for us, good for future retirees, and good for the economy of the country.

We will continue to add information to this page. Additionally CRCEA has created a web page that includes a great many articles on pensions. It is available at www.crcearesearch.com.