According to a recent article in the San Gabriel Valley Tribune, for only the second time CalPERS was forced to dramatically reduce promised benefits because of a default. In this case, the benefits were slashed by about 2/3rds for the job-training agency LA Works.
The agency was formed when the cities of West Covina, Azusa, Glendora and Covina created the joint-powers authority in 1979. However, they technically aren’t responsible for the welfare of the employees after LA Works was dissolved in 2014. That these communities have not been forced to pony up the promised benefits is beyond me.
Please don’t think that this event couldn’t happen in a community near you. We’ve seen a number of public entities file for bankruptcy protection, freeze/terminate DB plans, and shift employees to glorified savings accounts (DC plans).