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February 1, 2009 / jimnv

Leave PERS alone… it works

PERS, Public Employee Retirement System with over $20 billion in assets provides retirement for thousands of state and local employees including teachers, firefighters and police. The system is very important because for most retirees, it is their only source of income.  PERS is not integrated with Social Security and government employees do not pay into the system except for Medicare starting in 1986 for new participants.  When Social Security was created, government employees were not allowed to participate and were left without any retirement plan until 1948 when PERS was created. 

Right now, active members pay 10.5 percent of their salary toward their retirement benefit, higher than the 6.2 percent contribution rate for workers within Social Security. That is an incredible difference!  The average benefit paid in 2007 to a regular member was $ 2,216 a month and $3,549 for police/fire members. Remember, an “average” retired state employee receives a lower amount because they made less when actively employed as compared with a county employee. 

PERS is a system that looks forward decades and acts accordingly by prudently investing its contributions to generate income.  The overall net return since 1984 has been over 9.5 percent as of September 2008. Their actuarial goal, the percent needed to pay benefits is 8%.  They are doing well.

There is an unfunded liability of about 20 percent but this will be corrected in less than 30 years. Though government employers in Nevada are currently paying about $250 million a year toward the unfunded liability, half of that amount comes from their employees. Also, there are 166 employers within PERS and all are paying their share of the liability over time. The State of Nevada is just one of 166 employers and its members comprise just one fifth of the total PERS participants.

The pension is not out of control as Gibbons and his supporters claim. The fund is stable and provides necessary income for thousands of retired Nevadans who contribute significantly to our economy. Annually, it pays out  about a billion dollars in benefits, most of which, about $800 million stays in Nevada.

In addition to reducing retirement benefits or possibly eliminating PERS entirely, the governor wants to force currently retired employees to pay thousands a year more for health benefits, which can easily reduce their annual income by almost 20 percent. The higher premiums will be a big deal.  Talk about a pay cut!

DIY: State employees who worked and paid into Social Security before working for the state have their social security benefit reduced by about two thirds?  Their Social Security pension is significantly reduced just because they were once government employees.  

If you worked and paid into the System, then you should get your full benefit like anyone else. Why do government employees have to subsidize social security recipients? 

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