WHAT OTHERS SAY: Another failed promise by CalPERS
Published: Monday, March 11, 2013 at 5:28 p.m.
Last Modified: Monday, March 11, 2013 at 5:28 p.m.
This editorial is from the
The honchos at the California Public Employees
Policyholders are upset. Back in the go-go ’90s, when CalPERS was hawking what was then the relatively novel insurance product that provides nursing home and assisted living care, it led customers to believe that premiums would never rise.
CalPERS actuaries were as wrong about long-term care as they were when they told the
Unlike public pensions, long-term care insurance policies aren’t guaranteed by taxpayers. So when claims soared and investment returns plummeted, policyholders were on the hook. To correct the unfunded liability, the CalPERS board voted to raise premiums by 8
Now the retirement system is offering cheaper 3, 6 or 10-year options instead of the lifetime benefit most policyholders bought back in the ’90s and early 2000s. By converting to these plans, CalPERS officials say, policyholders’ premiums will not increase and in some cases might be reduced.
Still, early buyers of CalPERS’ more expansive long-term care policies feel burned and with good reason. While there was no guarantee, CalPERS created an expectation that the cost of this extraordinary benefit would remain flat. It was a reckless promise, indicative of reckless management that previously ruled CalPERS. The adjustment under way was long overdue.
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