The calculations here are misleading. In fact, there will be significant savings from redirectiing the IAP to support the underfunded pension plan. These savings will be effected via an offset to increasing employer contribution rates in coming years,  whether or not the "pickup" employers have agreed in bargaining to convert their payments of the 6% IAP to salary for their employees. For employers who do not pick up the 6% IAP, the savings would be seen in a 6 points-of-payroll reduction in cost versus an average statewide PERS rate of 20.85% starting July 1 (and going to 32% over the next seven years). For employers who convert their 6% IAP payments to a 6% raise, there will be an offsetting impact on their savings of a little over one percent from increased payroll taxes. And, even if they convert 6% to the 6.95% mentioned in this story, they would still save 3.6% of payroll. Note that 1% of payroll statewide equals $100 million/year.  So the savings would be significant either way.