As reported by the Sacramento Bee:
CalPERS on Wednesday declared that the Sierra County town of Loyalton has defaulted on its debt to the giant pension fund, a move that means the state is poised to scale back retirees’ pension benefits.
The CalPERS board said Loyalton has failed to make the nearly $1.7 million “termination liability” it owes to the pension fund – the result of a City Council decision in March 2013 to pull out of the California Public Employees’ Retirement System.
The default means the CalPERS board can move to reduce retirees’ benefits in Loyalton by about 60 percent, according to a formula that takes into account the dollars the city has already paid into the pension system. That would mark the first time in state history that CalPERS has reduced retirees’ benefits because of a municipality’s failure to pay its pension bills. …
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