‘Bad taste.’ CalPERS board regrets pension mistakes, but votes to deny retiree appeals

Leaders of California’s $445 billion public employee pension system were uncomfortable last week after they rejected a batch of appeals from retirees who believed they were owed more money than they’re getting every month.

Members of the California Public Employees’ Retirement System Board of Administration turned down nine of the 10 requests they considered, but said they wanted to do more to prevent mistakes in estimates that can cost retires thousands of dollars a month.

CalPERS Board of Administration member Shawnda Westly emphasized the mistakes have devastating consequences for workers trying to estimate their retirement income.

“I’m really tired of our members being the ones who end up holding the bag and having to pay the price,” she said. “I can totally appreciate that it is a very small percentage of mistakes that happen but when they do, they completely alter someone’s retirement and their life.”

One request, from a retired Redondo police officer, was held for further review by the board.

Board member David Miller said that the decisions left a “bad taste” among board members even though they were supported by California pension law.

“I think we really deserve, our members really deserve us to take a deeper dive because all too often we make decisions that are in line with our fiduciary responsibility, but that do not feel fair or just to our members,” Miller said.

He spoke after a short discussion about an appeal from retiree Marla Moura, whose case The Sacramento Bee covered last week.

Moura, who worked as a school psychologist, was told by three different CalPERS advisers that her retirement pension would be greater than $5,000 every month. When she retired, she discovered that the actual pension was less than $3,000 a month.

Her case was complicated because she left public sector employment for two years, and when she returned, new rules applied under the 2013 Public Employees Pension Reform Act. As a result, she’s receiving a pension based on two formulas rather than the single more generous calculation available to public employees prior to Jan. 1, 2013.

Though board members voted to deny her appeal, they spent some time discussing both Moura’s case and others like it.

Frank Ruffino, a delegate for CalPERS board member and state Treasurer Fiona Ma, said that Ma is interested in working with the board to prevent cases like Moura’s from happening again.

Ma “understands that the technical issue on this case and she gets it in terms that we don’t have technically speaking a choice, but at the same time given all the press, given all the publicity that this not just this case but several cases related to mistakes are out there, I think we need to do a better job,” Ruffino said during the hearing.

Ma in a written statement to The Sacramento Bee declined to comment specifically on Moura’s case but acknowledged that the board is hearing from pension holders who “are being penalized by ambiguities and different interpetations of regulations and the intent of various laws passed by the Legislature.”

“I am working with the CalPERS Board in reviewing current regulations and looking at potential legislative fixes that will clarify discrepancies so our retirees can have peace of mind when they retire,” Ma said in the statement.

Marcie Frost, CalPERS chief executive officer, pledged to return to the board with more information about how government employers and CalPERS provide pension estimates to public employees.

She noted that CalPERS, which manages retirement and health care plans for almost 3,000 government agencies, is considered one of the most complex pension funds in the world.

“You are hearing obviously about the ones that are more egregious or the ones that are really bothersome to some of our own members. But we are doing millions of transactions a year and our error rate is very low,” she said.

She also pointed to turnover at CalPERS and in the human resources departments of local governments as a problem, adding that it takes six to 12 months to get someone fully trained in all of the complexities of the retirement program.

This story was originally published March 22, 2021 at 5:00 AM with the headline "‘Bad taste.’ CalPERS board regrets pension mistakes, but votes to deny retiree appeals."