Bob Griswold, Bank of Marin's president and chief executive officer, says private businesses simply can't afford the kind of public pensions provided by Marin County and other local agencies. IJ photo/Alan Dep

"The costs are so difficult to predict going forward," said Robert Griswold, chief executive of Bank of Marin. "That's one of the big reasons that private employers have moved away from pensions and gone to 401(k) plans, where the costs are known and determinable."

The federal Department of Labor reported this week that only 21 percent of private employees participate in defined benefit plans that guarantee pensions, like public plans do - but that 42 percent of private employees are in 401(k)-style defined contribution plans.

Griswold, whose bank employs about 200, is among Marin business executives who feel Marin's county and city defined benefit pension programs are not sustainable.

"People making the promises are spending someone else's money," said Griswold, who serves as chairman of the North Bay Council, an association of major employers in Marin and Sonoma counties.

In private business, "We're accountable to our shareholders, and we can't make those kind of promises," he said.

He said the North Bay Council thinks public pension costs are "an issue that needs to be addressed." Such guaranteed programs shouldered by taxpayers are "a dinosaur, a thing of the past," he said. "Few private companies have them - and almost no new private companies starting out have them."

Paul Finkle, president of WEA Consulting, a human resources consulting firm in San Rafael, agrees. "Since taxpayers are paying for it, there's not the same pressures on fiscal responsibility that are prevalent in the private sector," said Finkle, chairman-elect of the San Rafael Chamber of Commerce.

"In the private sector, if you can't afford it, you get rid of it, or go bankrupt," Finkle added. "And we now have a major court decision - in the case of United Airlines - that allows a bankrupt employer to renege on defined pension benefits."

None of Finkle's 400 to 500 recent clients in private business in Northern California has a defined benefits retirement plan that offers a guaranteed pension, Finkle said. "Virtually all my current clients over the last four to five years have 401(k) plans or similar defined contribution plans," he said.

And less than 10 percent of his clients offer retiree health-care benefits, in contrast to Marin's public employee plans, which offer retiree medical cost reimbursements.

"The ones that do are going south rapidly, because of rising health-care costs," Finkle said.

Retiree health-care benefits "are absolutely unsustainable, because we've got double digit increases in medical costs every year," he said. "The investment portfolios in public plans that you could once rely on to keep pace with those kinds of increases are not doing so, and will probably not do so in the near future."

Officials at two smaller employers in Marin - Orion Partners Ltd. and PC Guardian, both in San Rafael - say they provide 401(k) plans but no retiree health-care benefits.

"Our program would pale in comparison" with public-sector retirement plans, said Bill McCubbin, head of Orion Partners, a commercial real estate firm that employs about 50. "Unfortunately, we can't afford to be even close."

Caran Cuneo, human resources director at PC Guardian, a 38-employee provider of computer security products, said although both her parents benefited from some type of pension plan, times have changed.

"In this day and age, I think the writing's pretty clear on the wall that we're going to have to be more responsible for our own retirement," said Cuneo, president of Marin's HR Forum. "I don't think (public) programs are going to be able to sustain themselves."

Griswold said Bank of Marin's retirement benefits include a 401(k) plan that the company matches to a maximum of $4,000 annually, and an employee stock ownership plan in which workers are given company stock in a retirement account based on the company's profitability.

The bank does not finance retiree health-care insurance premiums, but allows retirees to stay in the group medical insurance plan indefinitely - much longer than the three-year maximum allowed in the state's COBRA program.

Finkle and Griswold said they understand that pensions are a key factor in enabling Marin public agencies to attract quality employees - especially given the high cost of living in the county and lack of housing.

Griswold said he would handle that issue by making salaries more competitive, instead of increasing retirement benefits. Salaries, he noted, are a predictable, pay-as-you-go cost.

"The county of Marin made changes to reduce the retirement age, and they said it wasn't going to cost anything," Griswold said of a decision to allow employees to retire at 50. "The next thing we know, the (employer) contribution rate is increasing significantly.

"Something's not right."