Anthony P. Archie
Archie is a public policy fellow in Business and Economic Studies.
Prior to joining Pacific
Research Institute, Anthony earned his masters degree
in public policy from Pepperdine University, specializing in
economics and regional/local policy. As part of his graduate
work, he co-authored Crisis in California: Reforming Workers’ Compensation,
a proposal that drew praise from an esteemed panel of scholars
and policy advisors. Mr. Archie has held internships on Capitol
Hill and in the State Assembly. He received his B.A. in economics
and political science
from Pepperdine University. [Archie index]
Disability, and Deception
California's Attorney General's sidesteps the truth...
[Anthony P. Archie] 3/21/05
Recent hearings on Governor Schwarzenegger’s pension proposal
have centered on the claim that death and disability benefits
will be eliminated under the plan. Pensioners should beware that
death and disability benefits aren’t going anywhere.
The governor’s plan to grant new state and local employees
ownership of individual pension accounts has been penned in two
forms, a bill in the Assembly and an initiative being circulated
for signatures. They clearly state that California will close
the existing defined-benefit system in favor of a more fiscally
stable defined-contribution system. Unfortunately, political
trickery has clouded the simplicity of the initiative’s
It is the responsibility of Attorney General Bill Lockyer to
write the title and summary of every initiative that crosses
his desk. In the summary for the pension initiative, he writes
in a seven-word sentence that death and disability benefits will
unequivocally be eliminated for new employees.
That one line has opened a Pandora’s box, creating anxiety
for those who depend on this income. The hearings in the Senate
and Assembly featured a number of concerned widows who feared
a reduction in survivor benefits. Visibly disturbed by the summary’s
language, they dismissed the pension reform as an attack on the
families of police officers and firefighters. Injured law enforcement
officers echoed that sentiment, calling the governor’s
plan an “injustice.” Such rhetoric overlooks the
reality that Mr. Lockyer’s statement is simply wrong.
Not only does the language of the pension plan unmistakably
state that this measure applies solely to employees hired after
July 1, 2007, there is no portion of the initiative that proposes
the elimination, or even reduction, of death or disability benefits
for the new hires.
The group backing the initiative, Citizens to
Save California, released this statement on the matter: “We do not share
the Attorney General’s interpretation. In our view public
agencies could determine to offer death and/or disability benefits
for employees in addition to the defined contribution plan.”
The governor seconded that when he said, “I can guarantee
you that as long as I am governor, there will never be any death
benefits or disability benefits taken away. It won’t happen.”
Despite the Attorney General’s misinformation,
death and disability benefits can exist within defined-contribution
The state of Michigan operates under a 401k plan but also provides
disability protection based upon salary and years of service.
If an employee must retire due to the disability, he or she is
entitled to no-cost life insurance coverage plus continued health,
dental, and vision insurance.
In the event of a death, survivors will receive
distributions of the employee’s 401k account and continued insurance
coverage, as well as a life insurance payout equal to two times
the employee’s annual salary. An additional $100,000 is
provided if the death was due to an on-the-job injury.
A new pension system will not leave California’s
public employees high and dry. Public employees and their families
not be duped by those who promote this untruth. The Attorney
General of California, the highest law-enforcement official in
the state, should not be in the fabrication business.CRO
2005 Pacific Research Institute