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January 2, 2013 / jimnv

Retirement Changes Necessary

Last night, Congress avoided the much touted “fiscal cliff”. To help avoid it, the payroll tax will go from 4.2 percent to 6.2 percent, a rate in place two years ago. The reaction from “economists” was that this will be a significant financial hit for people already mired with economic problems. Well, folks I am not buying it.

Right now, state employees pay 12.25 percent of their salaries into their retirement plan. On July 1st they will have to contend with a 1 percent increase. State employees must also deal with economic pressures like anyone else. I don’t hear how awful this is for state employees. I am not saying there should be no increase in NVPERS contributions because the retirement system must be kept financially sound. However, it is annoying to hear how terrible it is to pay just 6.2 percent when state employees pay almost double that right now.

State employees had their salaries decreased last session and they must still take furlough days. They have not received a cost of living increase in years and merit and longevity pay no longer exist except on paper. Further, they have had their heath insurance changed to a high deductible plan with higher premiums and out-of-pocket requirements. The changes were necessary to put back money into the health plan’s reserve accounts meant for health care providers and to cover catastrophic events. Last session, the legislature depleted the health plan’s reserves after they took tens of millions of dollars from them to help balance the budget. (State Employee Tax)

Social Security participants pay remarkably little in contributions when compared to Nevada state employees. The payroll tax reduction two years ago helped infuse the economy with extra cash. Unfortunately, this made the Social Security system financially weaker. Increasing the payroll tax to 6.2 percent means Social Security will go bankrupt a little later than sooner.

Here is an idea… how about Social Security participants pay 13.25 percent of their salaries just like Nevada state employees? This would guarantee a stronger Social Security system. Or let’s just change Social Security to a NV PERS type of retirement system with a 13.25 percent contribution rate.

I hear the average worker the U.S. received modest cost of living raises in the past few years, so how about doing that for state employees? A good start would be to eliminate furlough days.


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  1. mjackson546 / Jan 2 2013 3:25 pm

    After 5 years, a state employee is then vested and can go “employer-only” on their retirement. I knew a state worker who is going to retire with 30 years and 25 years of retirement will be paid by the taxpayers. He doesn’t have to worry about the 13.25 percent cut on his paycheck and he’s not the only one to take advantage of this.

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