Schwarzenegger backs off plan to change public pensions

The Associated Press reports that

In a dramatic policy reversal Thursday, Gov. Arnold Schwarzenegger backed off his plan to reshape California's public employee pension system for now, saying 'misconceptions' by firefighters and police officers that it would strip them of death and disability benefits had overwhelmed the issue.

This had been a major issue for Cal State faculty, of which I am one. And CFA, the faculty union, is taking credit for helping to force Schwarzenegger to back down. But according to the news report,

Schwarzenegger … was flanked by more than a dozen police, fire and local government leaders

when he made his announcement. No mention was made of others, such as faculty at the CSU, who opposed the change.

There are more far-reaching consequences than just retirement. Schwarzenegger was attempting to do in California what Bush was pushing for with Social Security, i.e., convert it from a defined benefit plan to an individual and more privitized plan. Success in doing that in California would have helped Bush nationally. In addition,

For labor groups the plan had potentially devastating repercussions, as they feared a new system of forced individual investment accounts might gain momentum in other states and eventually dilute the power of $2 trillion in pension fund assets nationwide that have become major forces on Wall Street.

The $182.9 billion California Public Employees Retirement Fund, with 1.4 million members, is the nation's largest fund and a leader in pressing for changes in how executives are paid and companies are run. [emphasis added] The $125 billion California State Teachers Retirement System, with 750,000 members, is also in the top three nationally.