Party’s Over for UC Pension Plan

University of California employees have been forced to start paying into their pension plan again, after a UC Regents vote last week. Back in the 1980s and 1990s, the investment fund was so well managed, with double-digit rates of return year after year, that the Regents ended contributions in 1990 and let the fund pay for itself. Now, the pension fund is in serious trouble, and the contributions will have to start again in order to keep it solvent. Employees will contribute two percent of their paychecks, while the university will pay the equivalent of four percent; both figures are expected to rise in subsequent years. It’s tempting to characterize this as just another casualty of the terrible economy, but don’t be fooled. The Regents, led by Gerald Parsky, screwed up the investment strategy long before the bust, turning what was once one of the most lucrative pension plans into one of the worst-performing plans in the country, costing the system billions of dollars in bad deals, and enriching a small army of Wall Street money managers. Employees and union members are now demanding a say in how their pension funds are invested, a move the Regents are still resisting, to their discredit.

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