2010-04 Going For Broke: Reforming California’s Public Employee Pension Systems

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					SIEPR brief
                                                                                             Stanford University • April 2010

Stanford Institute for Economic Policy Research                                               on the web:

Going For Broke: Reforming California’s Public
Employee Pension Systems
By Howard Bornstein, Stan Markuze, Cameron Percy, Lisha Wang, and Moritz Zander.
Faculty Advisor: Joe Nation

Introduction                                   available sources, primarily the
    CalPERS, CalSTRS, and UCRS          1      quarterly and annually published               About the Authors
together administer the pensions               financial reports of each fund. In             Howard Bornstein, Stan Markuze, and
of approximately 2.6 million                   addition, we sought and received               Cameron Percy are graduate students in the
Californians. Between June 2008                input from economists and faculty              Public Policy Program at Stanford. Lisha Wang
and June 2009, these three public              advisors at Stanford University and            and Moritz Zander are graduate students in
pension funds lost a combined                  other institutions to support our              Stanford’s International Policy Studies Program.
$109.7 billion in portfolio value              analysis and conclusions.
                                                                                              This graduate team prepared this report on
(see Table 1). The ability of
                                                                                              California public employee pensions as part of
these three funds to meet their                Measuring Today’s                              the graduate Practicum in Public Policy, a two-
future obligations has significant             Funding Status                                 quarter sequence required for Master’s students
implications for the fiscal health                Complying with Govern­                      in both the Public Policy and International Policy
of the state and public employers,             mental Accounting Standards                    Studies Programs. The client for this project was
the effective underwriters of                  Board (GASB) Statement #25,                    the Office of Governor Arnold Schwarzenegger.
many public pensions.                          public pension funds discount                  The full report can be obtained from the Public
    In this policy brief, we ask two           future pension liabilities at the              Policy Program at .
questions: (1) what is the current             same rate they expect to earn
funding shortfall of CalPERS,                                                                 Joe Nation served as the instructor and an
                                               every year on invested assets.2                advisor for this research team and directs
CalSTRS, and UCRS, and (2) what                We believe this rule leads to
policies would prevent a similar                                                              the graduate student Practicum at Stanford
                                               understated publicly reported                  University. He teaches climate change, health
shortfall in the future?                       pension liabilities.
    The data presented in this                                                                care policy, and public policy.
report are all from publicly                   continued on inside...                         Nation represented Marin and Sonoma Counties
                                                                                              in the State Assembly from 2000-2006. He
                                                                                              received a Ph.D. in Public Policy Analysis from
1 The California Public Employees’ Retirement System (CalPERS), California State Teachers’
Retirement System (CalSTRS), and University of California Retirement System (UCRS).           the Pardee RAND Graduate School; his graduate
2 For a further discussion see: Peng, Jun, State and Local Pension Fund Management.           work focused on budget modeling and long-
Taylor and Francis, 2009.                                                                     term budget projections.
SIEPR policy brief
    When making an apples­to­                      tion and cannot be reduced:                             discounted and reported at risk­
apples comparison of pension                       “A public employee’s pension                            free rates.
obligations today relative to                      constitutes an element of                                   Adjusting the discount rate
invested fund assets, choosing                     compensation, and a vested                              used on liabilities to a risk­free
the correct discount rate for                      contractual right to pension                            rate, we estimate the combined
future liabilities is critical.                    benefits accrues upon                                   funding shortfall of CalPERS,
Financial liabilities have to                      acceptance of employment.                               CalSTRS, and UCRS prior to
be discounted at the rate that                     Such a pension right may not                            the 2008/2009 recession at
most accurately reflects their                     be destroyed, once vested,                              $425.2 billion (see Table 2).
inherent risk. What is the risk                    without impairing a contractual                         At the time of this writing, the
associated with public pensions                    obligation of the employing                             funds have not released more
in California? California law                      public entity.”3 Since pension                          recent financial reports, but due
affirms vested public pensions                     liabilities are effectively riskless,                   to the previously mentioned
are a form of deferred compensa­                   we believe they should be                               $109.7 billion loss the three
                                                                                                           funds collectively sustained, we
                                                                                                           estimate the current shortfall at
Table 1 — Fund Summaries                                                                                   more than half a trillion dollars.4
                                                                                                               The traditional metric of
                       Active/Inactive           Current            Portfolio Value Change ($B)
                                                                                                           pension fund health is the
                          Members                Retirees              (FY ending 6/30/09)
                                                                                                           funding ratio (assets divided by
   CalPERS                 1,134,000             493,000                   – $56.9, (– 23.7%)              liabilities). The target funding
                                                                                                           ratio for a plan considered fully
   CalSTRS                   609,000             224,000                   – $43.1, (– 25.0%)
                                                                                                           funded is 100 percent. When
   UCRS                      171,000               43,000                   – $9.7, (– 23.0%)              the ratio is above or below 100
                                                                                                           percent, pension plans amortize
   ToTAlS                  1,914,000             760,000                            – $109.7
                                                                                                           over­ or under­funding by
Sources: CalPERS, CalSTRS, UCRS financial reports, FY2008­2009.                                            making adjustments to annual

Table 2 — Risk-Adjusted Pension Shortfall as of July 1, 2008 ($B)
                                                STATEd                                                                 AdjUSTEd

                  discount                                   Unfunded            Funding        discount                     Unfunded      Funding
                                   Assets      liabilities                                                    liabilities
                    Rate                                     liabilities          Ratio           Rate                       liabilities    Ratio

   CalPERS         7.75%               238.6     277.2            38.6            86.1%           4.14%         478.3             239.7     49.9%

   CalSTRS            8%               161.5     177.7            16.2            90.9%           4.14%         318.2             156.7    50.8%

   UCRS             7.5%                42.0       42.6            0.6            98.6%           4.14%           70.8             28.7    59.3%

   ToTAl                               442.1     497.5            55.4                                          867.3             425.2
Sources: CalPERS, CalSTRS, UCRS financial reports, FY2008­2009; Team analysis.

3 Betts vs. Board of Administration (1978) 21 Cal.3d 859.
4 We re-estimate liabilities, adjusted for risk, by using the average duration of liabilities, which at CalPERS is 16 years. For CalSTRS
and UCRS we assume a similar 16­year duration. Knowing the present value of liabilities discounted at the fund’s official rates, we can
compound liabilities 16 years out, and discount back at the risk-free rate. As a proxy for the risk-free rate we use the yield-to-maturity
(YTM) of 10-year US Treasury Bills in February 2010. Since public pensions include cost-of-living-adjustment (COLA) provisions, there
remains an inflation risk mismatch. If we adjust for inflation using the yield of Treasury Inflation Protected Bonds (TIPS), liabilities and
the shortfall would be significantly higher.
                                                                                                                                                     Stanford University • April 2010

  Figure 1 — Cumulative Probability of Shortfall in 16 Years                                                                                          compounding.5
                                                                                                                                                           Instead of funding ratios,
                            80%                                                                                                                       we believe a more relevant
                            70%                                  66%            67%                                                                   question for policymakers is —
                                                                        59%           59%
                                                                                                   61%                              CalPERS           given current assets, projected
                                                                                                         51%                        CalSTRS           liabilities, and the expected
Probability of Shortfall

                            50%                                                                                                                       growth of assets — how likely
                            40%             34%
                                                                                                                                                      is it that a pension fund will be
                            30%       29%                                                                                                             able to cover its liabilities in the
                                                                                            22%                        22%                            future. Under the GASB reporting
                                                                                                                                    12%               rules there are no required
                            10%                                                                                                                       “stress tests” for public pension
                             0%                                                                                                                       funds that project scenarios in
                                       Surplus                Deficit               Deficit         Deficit       Deficit           Deficit
                                                                                                                                                      which actual investment returns
                                                               >$0                  >$50B          >$100B        >$250B            >$500B+
                                                                                                                                                      are below expectations. We
    Figure 2 — Cumulative Probabilities of Shortfall in 16                                                                                            performed portfolio growth
                                                                                                                                                      simulations for each of the
    Years (Deficits on a Percentage Basis)
                                                                                                                                                      three funds, assuming portfolios
                            70%                                                                                                                       that achieve stated average
                                                        62%                                                                         CalPERS
                            60%                               58%                                                                                     investment returns and similar
                                                                              52%                                                   CalSTRS           volatilities of returns as exhibited
                            50%                                                     47%
                                                                                                                                                      in the past. Assuming the funds’
                                        41%                                                       40%
                                                                                       39%                                                            future liabilities have a 16­year
                            40%                                                                         35%
                                                                                                                                                      duration,6 compounded forward
 Probability of Shortfall

                            30%   29%                                                                      28%   28%
                                                                                                                       23%                            at official discount rates, we
                            20%                                                                                              18%   17%                estimate the probabilities of
                                                                                                                                               10%    different funding levels using a
                                                                                                                                                      Monte Carlo simulation.7 Figure 1
                            0%                                                                                                                        displays our findings. By example,
                                   Surplus               Deficit               Deficit             Deficit        Deficit           Deficit
                                                          10%                   20%                 30%            40%               50%              our model indicates a 71 percent
                                                                                                                                                      chance that CalPERS will have
  contributions. We believe funding                                                         expected level. More specifically,                        a deficit in 16 years and a 44
  ratios constructed under GASB                                                             we estimate that the likelihood                           percent chance that deficit will
  #25 belie the truth of fund health,                                                       a “fully funded” pension plan                             exceed $250 billion. To make the
  because discounting liabilities                                                           (i.e., one with a funding ratio of                        funds more comparable regard­
  above the risk­free rate ignores                                                          100 percent) will be unable to                            less of size, we also calculated
  the risk that actual rates of return                                                      cover all of its liabilities is more                      deficits as percentages of
  will be permanently below the                                                             than 50 percent due to geometric                          liabilities (Figure 2).

  5 Geometric compounding means that if a portfolio increases by 10% in year 1 and decreases 10% in year 2, the net result is negative,
  not zero.
  6 The 16­year duration of CalPERS was informally given to us by a senior executive at CalPERS in a personal conversation. We
  assumed the same duration for CalSTRS and UCRS.
  7 We ran Monte Carlo simulations to create 16­year investment portfolio outcomes, each employing of 16 random rates of return,
  assuming a normal distribution around each of the expected rates and retaining historical standard deviation. We repeated random
  draws for a total sample size of 25,000 outcomes. Of the 25,000 different portfolio outcomes we then counted the number of observations
  for which net assets (assets minus liabilities) were above or below different threshold values. To determine probabilities we divided
  this number by the total number of observations. For example, our first threshold value is 0. To determine the probability that each of
  the three funds would end up in surplus by the average duration, (i.e. the average time pensions come due), we counted the number
  of times net assets were positive and divided this number by all observations.
SIEPR policy brief
Figure 3 — Actual CalPERS Contributions vs.                                                                                 amount that would fund the
Normal Cost Contributions                                                                                                   projected benefit if it were paid
                                                                                                                            annually from date of employ­
           8                                                                                        7.2
                                                                                                                6.9         ment until retirement.”9
                      CalPERS Contributions                                             6.4                                     Although Normal Cost
           6                                                    5.8
                                                                                                                            calculations are made with the
                      CalPERS Normal Cost                                                                 4.7         4.7   expectation that employers
                                                    4.3                                       4.3

           4                                  3.6         3.8         3.7                                                   and employees will make
                                                                                                                            regular contributions every
                                        1.9                                                                                 year, contributions to CalPERS,
                                                                                                                            CalSTRS, and UCRS have been
               0.3                                                                                                          highly inconsistent over the
           0                                                                                                                past 20 years, falling in times of
               2001         2002        2003        2004        2005        2006        2007        2008        2009
                                                                                                                            market windfalls and rising when
Sources: CalPERS financial reports.
                                                                                                                            investments fall short. Figure 3
                                                                                                                            shows CalPERS’ contributions
    Using this insight for policy­                              $200 billion. Under conventional
                                                                                                                            relative to the calculated Normal
making, we propose an “80/80                                    funding metrics, this would
                                                                                                                            Cost contributions that should
strategy” as a prudent funding                                  translate into a funding ratio of
                                                                                                                            have been made.
target: pension funds should                                    130 percent.
                                                                                                                                Based on approximate annual
contribute and invest their                                                                                                 investment returns achieved
portfolios so that net assets limit                             Avoiding Future Shortfalls                                  by CalPERS, contributing at the
the chance of a deficit greater                                    We believe there are three                               Normal Cost from 2000 through
than 20 percent to a likelihood                                 key determinants of avoiding                                2009 would have resulted in
of no more than 20 percent, (i.e.,                              future shortfalls: following                                assets with a value of $33.8
an 80 percent likelihood that                                   prudent contributions policies,                             billion at the end of 2009
a fund will be able to cover at                                 managing assets in a way that                               versus the value of the actual
least 80 percent of its liabilities).                           limits volatility, and setting                              contributions, which totaled
Even under this strategy, given                                 sustainable benefit levels. We                              $36.6 billion at the end of 2009,
the current investment portfolios                               address each in turn.                                       a $2.8 billion difference. The
and wide variance of returns,                                                                                               total nominal dollars contributed
there is only a 60 percent chance                               Contributions                                               under CalPERS’ policy was $39.8
of a surplus. Hence, we consider                                    Prudent levels of annual                                billion, while the Normal Cost
an 80/80 approach at the low                                    contributions are generally de­                             method would have required
end of cautious. (If under an                                   fined as “the portion of the cost                           $34.6 billion in contributions, or
80/80 scheme a pension ends up                                  of projected benefits allocated                             $5.2 billion less. Here, CalPERS’
overfunded, any surplus should                                  to the current plan year.”8 The                             actual policy cost $5.2 billion
only be allowed to be used                                      regular contributions required to                           more than a more prudent policy
to repay state debt, however                                    fund fully an employee’s retire­                            of consistently contributing at
in a prudent way such that an                                   ment plan by the time he or she                             Normal Cost.
80/80 strategy would always be                                  retires, allowing for investment                                More surprisingly, under
preserved.)                                                     gains, is referred to as the “Nor­                          UCRS’ funding policy, adopted
    We estimate that adopting an                                mal Cost.” An additional metric                             in the fiscal year ending June 30,
80/80 strategy for all three funds                              usually used by managers is the                             1991, no contributions are made
as of June 2008 would have                                      “Level Percent Normal Cost”:                                to the pension fund when “the
required a collective infusion of                               “the level percentage of payroll                            market value or the actuarial

8 Office of the State Actuary,
9 CalPERS 2008 annual report, p. 55.
                                                                                               Stanford University • April 2010

value of plan assets (whichever            Figure 4 — CalPERS Asset Allocation (12/31/09)
is less) exceeds the lesser of the
                                                                  2.3%          1.4%
actuarial accrued liability plus
Normal Cost or 150 percent of                                                                                     Cash Equivalents
current liability plus Normal                                                          24.6%                      Global Fixed Income
Cost.”10 In short, contributions to                                                                               Alternative Assets (PE, VC)
UCRS are suspended when the                                  53.0%                                                Equity
fund value is deemed sufficiently
                                                                                                                  Real Estate
high relative to liabilities. Since
UCRS was overfunded in 1991,                                                                                      Inflation Linked
contributions dropped to below             Source: CalPERS Asset Allocation
1 percent of covered payroll               assetallocation.xml.
per year for every year between            ing at the Normal Cost rate and                      Understanding how pension
1994 and 2007. UCRS does not               to use the excess returns to pay                     fund assets are allocated can
disclose its Normal Cost in                down state debt. However, in the                     provide insight into how the
its annual report; however, it             case of a large market loss, we                      losses occurred.
alludes to its Normal Cost being           recommend making replenishing                            Again using CalPERS as
close to 16 percent of covered             contributions rapidly so that they                   an example, Figure 4 shows
earnings.11                                have a chance to grow before                         the asset allocation of the
    CalSTRS’ contributions have            the liabilities they are marked                      CalPERS portfolio. As we can
been far more consistent than              against come due. We believe                         see, a significant portion of the
those of CalPERS and UCRS. Cal­            repayments should be amortized                       CalPERS portfolio is invested
STRS follows a relatively prudent          across a period that is no longer                    in “equities” and “alternative
approach by making consistent              than half the duration of liabili­                   assets,” which are largely equity
contributions, achieving a                 ties, (eight years in the case of                    instruments. This pattern is
standard deviation of contribu­            CalPERS).                                            repeated at CalSTRS and UCRS,
tions that was approximately
                                                                                                with no fund having more than
one­fourth that of CalPERS.
    Contributions to pension               Investment Performance                               one­quarter of its portfolio
funds must be made consistently                As mentioned earlier, the                        invested in fixed­income assets.
at the pre­determined Normal               pressing nature of California                            Aside from the cash, fixed-
Cost level, which takes into               pension shortfalls is due in part                    income, and inflation­linked
account long­run investment                to the losses CalPERS, CalSTRS,                      assets, each portfolio is subject
return expectations, in order for          and UCRS sustained in the mar­                       to significant volatility, especially
the funds to meet their obliga­            kets over the past 18 months.                        since many of the investments
tions to pension beneficiaries.            CalPERS expects an average                           are correlated with each other.
Acknowledging that investment              annual investment return of                          (Here, correlation means that a
strategies can be wildly success­          7.75 percent12, CalSTRS targets                      significant drop in the value of
ful, we believe if investments             8.00 percent13, and UCRS                             equity investments is likely to be
exceed expectations by more                expects 7.50 percent14. Invest­                      reflected in the value of private
than 20 percent per year for               ment professionals at each fund                      equity and venture capital
at least five years, a prudent             have created asset allocations                       investments as well.) Figure 5
strategy is to continue contribut­         meant to achieve those targets.                      demonstrates the risk/return

10 2008 UCRS CAFR, p. 6.
11 Ibid.; Based on statement that one of the changes approved in March 2006 was “a multi­year contribution strategy under which
contribution rates will increase gradually over time to 16 percent of covered earnings, based on UCRP’s current Normal Cost.”
12 CalPERS Comprehensive Annual Financial Report 2009.
13 CalSTRS 2008 Comprehensive Annual Financial Report.
14 The University of California Retirement Plan Annual Financial Report 2008-2009.
SIEPR policy brief
 Figure 5 — Asset Class Returns                                                                        compensation. In 1999 California
                                                                                                       passed Senate Bill 400 (SB400),
             35%                                                                                       substantially raising benefit
             30%                                                                                       factors and lowering retirement
                                                                               Venture Capital
             25%                                                                                       ages for public employees (see
                                              S&P 500                                                  Table 3). Based on a National

                                                                                                       Institute on Retirement Security
             15%                                                                                       report, average monthly public
                                                                  Private Equity
             10%                                                                                       pension benefits in California
              5%                             Corporate Bonds                                           were $2,008 in 2006, the eighth
              0%                                                                                       highest nationwide.17
                   0%             5%                10%                  15%                     20%       Many states experience
                                                   Return                                              increasing pension costs.
 Sources: S&P500: NYU Stern School of Business (Prof. Aswath Damoradan’s website) http://pages.        The New York State Teacher
 Corporate Bonds: Center for International Securities and Derivatives Markets ‘The Benefits            Retirement System (NYSTRS)
 of Private Equity: 2006 Update                    recently adopted a two­tier
 Private Equity: Cambridge US Private Equity Index (Cambridge Associates: https://www.
                                                                                                       system to address the issue.                Under Chapter 504 of the Laws
                                                                                                       of 2009, anyone entering New
 Venture Capital: Cambridge US Venture Capital Index (Cambridge Associates:                                York State employment on or
                                                                                                       after January 1, 2010, will belong
 tradeoff inherent in investments                  earned with its highly volatile
                                                                                                       in “Tier 5,” which features
 in each of the asset classes.                     portfolio.16 This small reduction
                                                                                                       modified benefits criteria based
     While above­average returns                   in earnings would have allowed
                                                                                                       on age and pension benefit
 are available for savvy inves­                    CalPERS to reduce volatility by a
                                                                                                       factor. The rules of Tier 5
 tors, taking risk, particularly in                full 7.68 percentage points.
                                                                                                       effectively reduced benefit levels
 correlated asset classes, opens up                    Therefore, in order to avoid
                                                                                                       for future employees.
 the possibility of large investment               future severe underfunded
                                                                                                           Another option to reduce
 shortfalls. Again using CalPERS as                scenarios, we recommend that
                                                                                                       benefit costs is to move away
 an example, as we can observe                     CalPERS, CalSTRS, and UCRS
                                                                                                       from the defined benefits system,
 in Figure 6, the CalPERS portfolio                allocate more of their investment
                                                                                                       common to most public pensions
 has had returns averaging 7.91                    portfolios to fixed­income asset
                                                                                                       where retirees receive benefits
 percent over the last 25 years,                   classes, thereby reducing risk
                                                                                                       indefinitely, to a 401(k)­style
 with a standard deviation of 11.91                with a minimal loss of long­term
                                                                                                       system with individual accounts.
 percent.15 As expected, the high                  investment performance.
                                                                                                       A partial solution is a hybrid
 standard deviation means that 68                                                                      defined benefits and 401(k)­
 percent of the time, returns range                Benefit Levels                                      style plan. By way of example,
 from –4.0 percent to 19.82 per­                       Benefit levels are yet                          first­time public employees
 cent. Historically, if CalPERS had                another determinant of pension                      hired on or after August 29,
 simply invested in investment­                    shortfalls. Public pension                          2003 in Oregon became part
 grade corporate bonds, the fund                   benefits are calculated for each                    of the Oregon Public Service
 could have earned 7.25 percent,                   retiree by multiplying years of                     Retirement System (OPSRP).
 only .66 percent less than it has                 service, benefit factor, and final                  OPSRP is a hybrid plan with

 15 CalPERS Facts at a Glance: Investments
 16 7.25% is the return on corporate bonds over the period from 1990 to 2005. Bond returns between 1984 and 2009 were not
 17 National Institution on Retirement Security, Washington DC, Feb 2009
                                                                                                 Stanford University • April 2010

Figure 6 — CalPERS Returns                                                                        two­thirds of Californians would
                                                                                                  favor modifying pensions for new
         40%                                                                                      public employees to 401(k)­style
                                                                                                  plans.18 We therefore recommend
         30%                                                                                      a hybrid plan be considered
                     Portfolio Average
                                                                                                  through either the legislative or
         20%         Return = 7.91%                                                               popular political processes.
                     St. Dev. = 11.91%
         10%                                                                                      Conclusions
                                                                                                      We conclude that California’s

         0%                                                                                       public pension liabilities are
                                                                                                  substantially understated. Given
     -10%                                                                                         the consequences of pension
                                 Bond Average
                                 Return = 7.25%                                                   underfunding, we believe every
     -20%                        St. Dev. = 4.23%                                                 effort should be made in short
                                                                                                  order to implement policy changes
     -30%                                                                                         to reverse the current shortfall
Source: CalPERS: CalPERS website:­docs/about/facts/investme.pdf.    and to prevent a similar shortfall
Corporate Bonds: Center for International Securities and Derivatives Markets ‘The Benefits        in the future. Specifically,
of Private Equity: 2006 Update
priveq/2070309­benefitsofprivateinvestment.pdf.                                                   improved long­term funding
                                                                                                  outcomes can be influenced
Table 3 — Comparison of Current Benefit Levels vs.                                                through higher contributions,
                                                                                                  investment in less risky assets,
Pre-SB-400                                                                                        and lower benefit levels
          Retirement Category            Current Retirement Formulas   Pre SB-400 Formulas
                                                                                                  Key Policy
               Miscellaneous                   2.5% at age 63+           2.0% at age 63+
               State Safety                    2.5% at age 55+           2.0% at age 55+
               Peace Officer                   3.0% at age 50+           2.5% at age 55+          • Adopt probability-based
                                                                                                    funding targets.
               Firefighter                     3.0% at age 50+           3.0% at age 55+
                                                                                                  • At a minimum, funds should
               Highway Patrol                  3.0% at age 50+           3.0% at age 55+            be 80% certain of covering
Source: Senate Bill 400 (1999).                                                                     at least 80% of liabilities,
                                                                                                    (an “80/80 strategy”).
two components: the Pension                              reflecting a different asset             • Make contributions at
Program (defined benefits) and                           portfolio from a defined benefit           the Normal Rate without
the Individual Account Program                           plan. Beneficiaries access the
                                                                                                  • Amortize shortfall repayments
(401(k)­style). When a member in                         portfolio value more easily
                                                                                                    over at most half the duration
the Individual Account Program                           and make judgments as to its
                                                                                                    of liabilities.
retires, he receives access to the                       adequacy. However, the pension           • Invest in less volatile asset
contributions stemming from his                          beneficiaries take on a higher             classes (predominantly fixed
years of employment, plus any                            concomitant portion of risk.               income).
investment earnings or losses                                Such a plan appears to have          • Offer employees a hybrid sys­
that have accrued.                                       popular support in California. A           tem of both defined benefits
    A hybrid plan can include                            poll by the Public Policy Insti­           and a 401(k)­style system.
higher expectations of returns,                          tute of California reported that

18 Ed, Mendel, CHP Union Exec: lower pensions for new hires?, 1 Feb 2010­union­exec­lower­
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