Information on a cruise sponsored by the Sacramento Area Firefighters Widows & Orphans Fund  is now available.  The four-day Mexico cruise is planned for February 4-8, 2013. Click on the Widows & Orphans logo on this page for details or download the attached flyer.

CalPERS Responds to LAO Analysis of Pension Reform Initiatives

The California Public Employees' Retirement System (CalPERS) today issued the following response to the Legislative Analyst's Office (LAO) analysis of Government Employee Pension Reform Act initiatives:

"The Legislative Analyst's Office raises legitimate and serious concerns about both initiatives and the legality of the proposed changes which would have the most severe impact on existing employees," said Anne Stausboll, CalPERS Chief Executive Officer. "Additionally, the LAO rightly identified the 'large uncertainty about (these measures') possible fiscal effects' and how they 'would apply to the variety of public employees in California …'"

"We will continue to be closely involved in the current legislative process concerning pension reform, and look forward to working on these issues in a productive manner with all Californians," Stausboll said. "As an honest broker of factual information about pensions, CalPERS won't shy away from truthful discussions about pension structure and reform as we work to maintain a sustainable, sound and secure system that protects our members and benefits the State. When it comes to the retirement security of our public servants, all Californians deserve more realistic solutions now and less lawsuits and uncertainty for the next 'several decades.'"

CalPERS is the nation's largest public pension fund with approximately $225 billion in assets, providing retirement benefits to more than 1.6 million State, public school, and local public agency employees, retirees, and their families, and health benefits to more than 1.3 million members. The average CalPERS pension is $2,220 per month. For more information about CalPERS, visit www.calpers.ca.gov.

CalPERS Issues Response to Stanford Pension Study

CalPERS today responded to the Stanford Institute for Economic Policy Research (SIEPR) report examining CalPERS, the California State Teachers’ Retirement System (CalSTRS) and the University of California Retirement Plan (UCRP):

“The study is written from a perspective that is intended to exaggerate perceived costs and the instability of pension systems,” said Ann Boynton, Deputy Executive Officer of CalPERS Benefit Programs Policy and Planning. “The report’s findings were based on low discount rates to artificially magnify unfunded liabilities.  It is important to remember that CalPERS invests in a highly diversified portfolio that includes stocks, real estate, and other assets that have historically earned significantly higher returns than the rates assumed in the study.”

The health of the CalPERS fund has improved in the last two fiscal years as noted below:
   •  Over the past 20 years through June 30, 2011, CalPERS has earned an average annual investment return of 8.4 percent in excess of the pension fund’s actuarial rate of return assumption of 7.75 percent needed to pay long-term benefits. The Fund has achieved this rate      by investing in a diversified portfolio with an acceptable level of risk. This historical average includes steep losses experienced in 2008-09.
     •  As of the most recent fiscal year end, the Fund earned a 21.7 rate of return and gained back $60.8 billion from the recent 2009 low of $181 billion. CalPERS assets currently stand at more than $224 billion.
     •  CalPERS has maintained good levels of funding and delivered promised benefits for 80 years.Currently we are near a 75 percent funded status, with an unfunded liability of $85-90 billion.
     •  For every dollar paid in pension benefits over the last 20 years the vast majority came from investments:

Investment earnings                  66 cents
Employer contributions             21 cents
Member contributions               13 cents
 
More information on CalPERS pensions please see attached: Guide to CalPERS Pension Facts.

SACRAMENTO, CA – Beginning January 1, 2012, CalPERS members will see a few changes in their health plan pharmacy benefits approved by the CalPERS Board of Administration earlier this year.

One change is a “member pays the difference” requirement. Under this new rule, when a doctor prescribes a brand name drug – and a U.S. Food and Drug Administration (FDA) approved generic equivalent is available – the member will pay the difference between the costs of the brand name and the generic drug. The member will also have to make the generic drug co-payment.

To use a hypothetical example, a doctor might write a prescription for a brand name drug for which a generic drug equivalent is available. The plan cost of a 30-day supply of the brand name drug is $100 and a 30-day supply of the generic drug is $15. The member preferring to use the brand name drug will pay the $85 difference plus the applicable $5 co-payment. The total cost to the member will be $90, versus $5, had the member selected the generic drug. A member may obtain an exception to the “member pays the difference” requirement if the prescribing physician provides thorough documentation that the member must use a brand medication and not the generic equivalent.

Another change is that the co-payment for retail pharmacy purchases of brand name drugs will increase by $5. Furthermore, the co-payment for 90-day mail order prescriptions of brand name drugs will be standardized at double the co-payment of a 30-day retail subscription; this means that members can receive a 90-day supply of a maintenance medication through the mail for the same price of a 60-day supply purchased at a pharmacy. There will be no increase in the co-payment for generic drugs bought at retail pharmacies or through the mail.

CalPERS Board members approved the increase in its members’ share of pharmacy benefits due in large part to the fact that CalPERS is below the median copayment for preferred drugs. In addition, the employer share of pharmacy costs has risen over the past several years, while the member share has decreased. The last CalPERS pharmacy benefits co-payment increase was in 2001. The new co-payment structure will result in an alignment that brings CalPERS portion of pharmacy benefit costs to about half of where they were when the last co-payment increase occurred.

In June, the CalPERS Board of Administration awarded CVS Caremark the contract as the new Pharmacy Benefits Manager (PBM) for CalPERS self-funded Preferred Provider Organization (PPO) plans. CVS Caremark will replace the current PBM, Medco, in January 2012. PPO members will have a new option of obtaining 90-day supplies of maintenance medications at a CVS retail pharmacy. CVS Caremark’s “Maintenance Choice Program” allows a member to enjoy same-day prescription availability and to talk face-to-face with a pharmacist while paying a low mail-order co-payment. More information on CVS Caremark and the transition of PBM services is available online atwww.caremark.com/calpers.

CalPERS is the largest purchaser of public employee health benefits in California, and the second largest public purchaser in the nation after the federal government. CalPERS provides health benefits to more than 1.3 million State and public agency active and retired members at an annual cost of nearly $7 billion. For more information on CalPERS, please visit www.calpers.ca.gov.

CalPERS applauds a recent California Supreme court ruling which found that health benefits for government retirees may not be eliminated if state and local governments clearly promised those benefits as part of employment agreements.

In a closely-followed Orange County case, the court unanimously ruled when health care benefits have been approved for retirees, a lifetime right to those benefits can be implied. Health benefits can be considered a vested right, fully protected by both contract law and the constitution if it can be proven that health benefits were promised to workers.

"Under California law, a vested right to health benefits for retired county employees can be implied under certain circumstances from a county ordinance or resolution," Justice Marvin R. Baxter wrote for the court.

CalPERS provides health benefits to more than 1.3 million public employees, retirees, and their families