California Is About to Repeat One of Its Worst Public Safety Pension Mistakes
A proposed new retirement perk for CHP and Cal Fire shows Sacramento refuses to fix a broken system
⏱️ 5 min read
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A System That Rewards Leaving Early
California built one of the most generous public safety retirement systems in the country. Except it costs taxpayers too much, thanks to generous pension formulas that encourage early retirement. Now, rather than correcting course, Sacramento is preparing to add another benefit and present it as reform.
Assembly Bill 1054, which has already passed the State Assembly, would allow California Highway Patrol officers and Cal Fire firefighters who are eligible to retire to remain on the job for up to five additional years, as laid out in a recent analysis piece done over on CalMatters. Framed as a retention tool, the proposal instead highlights a deeper flaw. The system is structured to encourage early retirement.
Under current law, many CHP officers can retire in their early 50s with pensions approaching 90 percent of their final salary after a full career. That is not a modest benefit. It is near full income replacement, decades before most Californians retire.
The result is predictable. When policy rewards early exit, early exit follows. This proposal attempts to address the consequence without fixing the cause.
A Workaround That Adds Cost and Risk
According to the CalMatters analysis, employees who would otherwise retire could instead freeze their pension at its current level, stop accruing additional pension credit, and continue working. Their retirement contributions would be redirected into a separate account managed by CalPERS, designed to provide roughly a 5 percent return. At the end of that period, they would retire and receive both their pension and a lump sum from that account.
A CHP officer earning $150,000 annually who retires with a 90 percent pension would receive about $135,000 per year for life. Under this program, that same officer could also accumulate a significant lump sum over five additional working years, potentially reaching hundreds of thousands of dollars, depending on contributions and final program details. That payment would come on top of the pension.
Supporters argue that the program could be cost-neutral because pension accrual stops during the deferred period. However, even the reporting notes that the actual cost remains uncertain and subject to negotiation, including whether the state would contribute additional funds to these accounts. The bill “requires” certification that the program is cost-neutral. However, that certification depends on projections that have often proven unreliable in past pension decisions. The proposal also introduces new financial risks.
A Precedent That Will Spread
The account is designed to deliver a fixed return. If those returns fall short, the gap does not disappear. It is absorbed elsewhere in the system.
In addition, shifting from long-term pension liabilities to large lump sum payouts creates immediate fiscal pressure that is easier to overlook at the outset and harder to manage later. Similar programs in other jurisdictions have produced large payouts and raised concerns about overlapping compensation, particularly when employees continue working or return to government service. None of this addresses the underlying issue.
The problem is not a lack of incentives to retain experienced personnel. The problem is a retirement structure that encourages employees to leave as soon as they qualify. If retention is truly a priority, the solution is straightforward.
Align retirement incentives with longer careers. That requires confronting difficult questions about retirement ages and benefit formulas. Sacramento has chosen not to take that path.
If AB 1054 becomes law, it will not remain limited to CHP and Cal Fire. It will spread. This pattern is familiar in California.
When one group secures a new benefit, others follow with the same argument. Recruitment, retention, and competitiveness become the rationale. What begins as a targeted policy becomes a broader expectation.
So, Does It Matter?
There is also a basic question of fairness. Most Californians do not retire in their early 50s with near full income replacement. They do not receive guaranteed pensions.
They are not offered additional programs that provide both a continued salary and substantial payouts at the end. Yet they fund this system. There is a broader lesson that Sacramento should have learned decades ago.
In 1999, lawmakers approved the “3 percent at 50” pension formula for public safety employees. That formula allows a law enforcement officer to retire at age 50 and receive a pension equal to 3 percent of salary for each year worked. After 30 years, that produces roughly 90 percent of the final pay for life.
At the time, lawmakers were assured the change would be financially sound. The projections appeared manageable. The risks were understated.
Many of those who cast that vote now view it differently. Several former Republican legislators who were present at the time have told me that it was among the worst decisions they made in office. That history matters.
This is not an unexpected problem. It is the result of a policy choice that did not perform as promised. Instead of correcting that mistake, the state is preparing to add another layer to it. If you don’t want public safety professionals to retire early, delay their retirement incentives. This isn’t complicated, but it requires having the courage to say no to pubic employee unions.
Sacramento is on the verge of repeating the same error, this time with full knowledge of the consequences. Oh yeah, has anyone noticed the size of our existing unfunded pension liabilities? Didn’t think so.