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February 28, 2011 / jimnv

Sandoval Wants New Retirement Plan

Sandoval wants a retirement plan that guarantees about half of what current state employees expect to get when they retire and it will include a 401 k type plan. New employees would be those hired after January or July 2012. The formula would be 1 1/4 percent per year of service, capped at 37.5 percent of the highest year after 30 years and might use a formula other than the highest 3 years. The plan would only apply to state employees and not county and local employees .

A recent PERS study concluded that it will cost $2 billion to set up a new retirement system because the old plan would have to be closed and its unfunded liabilities covered. Though the unfunded liabilities are about $10 billion they are expected to be covered in about 27 years. PERS is well-funded and not endanger of failing.

State employees are currently lower paid than the private sector for the same work and required job skills and education. State service will become a stepping stone to a private company that pays better and gives out bonuses when times are good.

Benefits have already been slashed, salaries frozen and then reduced because of furloughs.Retirement and health benefits were used to retain good employees but that will change and the state will be worse off for it.

 

 

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