California’s Santa Clara County used $16 million in federal housing funds not for affordable housing programs or similar services, but to increase guaranteed pension benefits for county workers. Employees of the county’s Housing Authority can now retire as early as age 50, receive as much as $40,000 annually during retirement, and enjoy 2 percent annual increases in pension benefits.
The US Department of Housing and Urban Development says the move does not violate the conditions of the federal program, according to an article in Mercury News.
Santa Clara County’s housing authority could have spent $16 million of federal funds to help more struggling families put a roof over their heads. Instead, it chose to more than double the value of its employees’ retirement benefits.
That may sound unusual, but federal housing officials say it was an allowable expense. Still, the switch from a 401(k)-style retirement plan to a pension allowing workers to retire early — with guaranteed lifetime payments — is raising eyebrows at a time when generous public employee pensions are under fire…
Housing authority workers who under the old plan had to wait until they were almost 60 to draw from retirement accounts — which could be shrunk by market losses — can now receive a guaranteed monthly pension check as early as age 50. And they’ll have a guarantee of 2 percent annual increases after they retire.
CalPERS records show one 66-year-old former housing authority official already is earning a $40,000 pension.
Most private employers have gone in the opposite direction and dumped pensions for 401(k)s, where employees assume the risk of investment losses in their retirement funds…
The change in retirement benefits was made possible after the U.S. Department of Housing and Urban Development in 2008 made the housing authority one of 32 Moving to Work demonstration sites. The program allows more spending flexibility to encourage “innovative” approaches that “use federal dollars more efficiently.”