People in California may have seen a recent news story about the fight over public employee pensions. The article discussed a pension reform gathering that took place earlier this year in Sacramento, and the possible implications that bringing pension reform to California could have on the state’s bottom line as well as the government workers who are entitled to benefits under the program.
According to the article, the average California government employee can expect to retire with about $26,000 a year in pension benefits. However, this amount can vary depending on the individual employee’s salary, years and of service and other factors. These benefits will be far less if pension reformers have their way.
The problem is that the millions of California workers who work for state or municipal entities, often at lower wages than their private sector counterparts, have worked for years, sometimes decades, with the expectation of receiving these benefits and would likely not take kindly to the idea of losing a sizeable portion of their retirement nest egg. Experts expect that any attempt to diminish or reform these benefits will result in a massive pushback from state labor unions and a multi-million dollar legal fight. On the other hand, financial experts claim the system is in need of major reform and could become unstable under current conditions.
People in California should always be proactive when it comes to asset protection, and while a pension is a nice benefit, it shouldn’t be a person’s only source of retirement income. With pensions in jeopardy, Social Security at risk of becoming bankrupt, and California taxes steadily increasing, people need to focus on estate planning now more than ever. An experienced estates and trusts attorney can help shield people from unnecessary taxation while creating enough diversification and protection to allow them to maintain their wealth and security through retirement.
Source: San Diego Free Press “Slash and Burn: The War Against California Pensions,” Gary Cohn, September 4, 2013