Students Paying the Price for Generous UC Pensions with Higher Tuition
The first in-state tuition hike in seven years at the University of California took effect this incoming school year and a big chunk of that new money will go to pay for the faculty’s increasingly generous retirements. Last year, more than 5,400 UC retirees received pensions over $100,000. In comparison, someone without a pension would need savings between $2 million and $3 million to guarantee a similar income in retirement. According to data, the average UC pension for people who retired after 30 years is $88,000. Lawrence McQuillan, author of California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis, states:
I think this year’s higher tuition is just the beginning of bailouts by students and their parents. The students had nothing to do with creating this, but they are going to be the piggy bank to solve the problem in the long term.
The number of UC retirees collecting six-figure pensions has actually increased 60 percent since 2012. Nearly three dozen retirees received pensions over $300,000 last year, four times as many as in 2012. The increased spending, generous salaries, and the UC’s failure to contribute to the pension fund for two decades have left the retirement system deep in the red. Last year, according to the university’s most recent annual valuation, there was a $15-billion gap between the amount on hand and the amount it owes to current and future retirees. University officials have attempted to control costs by increasing the retirement age and capping pensions for new hires, but those are long-term fixes that won’t yield significant savings for decades. The pension problem looks like it is going to be an issue for years to come and the only remedy appears to be further increases in tuition costs.