Who Wants to Be a Millionaire?
Government employees becoming pension millionaires
- Tuesday, April 1, 2014
Anyone who’s seen “Who Wants to Be a Millionaire” knows the excitement that comes from watching ordinary Americans turn knowledge of trivia into riches.
As great game show hosts do, Regis Philbin drew the attention of audiences by yelling out, “Who Wants to be a Millionaire?!” and made the anxiety of contestants palpable to viewers as the want-to-be-wealthy moved closer and closer to the prize.
Contrary to all the show’s hoopla, becoming a millionaire here in Nevada isn’t uncommon. It’s actually average — at least, if you’re a public-employee retiree.
According to a new study by the American Enterprise Institute, the average full-career public employee in Nevada who retired in 2011 or 2012 will become a “pension millionaire” — someone who receives a million dollars or more in retirement. On average, public retirees in the Silver State receive gold-plated pensions worth $1.33 million. And this doesn’t account for the tens of thousands of dollars in health-care benefits that many retirees receive.
Nevada’s benefits to public retirees are so lavish that they are the highest in the nation. On top of that, the average public-sector retiree in the state receives a higher income than 87 percent of Nevada’s current full-time workers.
It’s important to note that the study doesn’t consider public-safety retirees, who tend to retire earlier and reap even greater benefits, like former North Las Vegas firefighter and Assembly Speaker John Oceguera, who retired at the age of 43 and is projected to receive over $120,000 this year alone. If he lives to age 80 and continues to receive that amount annually, taxpayers will have paid him $4.44 million, not accounting for COLA, to be retired.
Nevada PERS payout information, available and searchable on TransparentNevada.com, confirms the study’s findings. Nearly 13,000 the 49,360 retirees in the system — which includes public-safety retirees — are set to receive more than $1 million in retirement if they live 20 years. If retirees live for 30 years in retirement, nearly 21,500 will join the pension millionaire’s club.
Given all this, it’s easy to see how our state’s public retirement system came to have an unfunded liability of roughly $41 billion. In other words: $41,550 per Nevada household.
That money has to come from somewhere. While the legislature has increased contribution rates in recent years, retirees risk seeing cuts to their benefits unless the system is soon reformed. As bankruptcy proceedings in Detroit have shown, not even public pensions are safe in times of fiscal collapse.
It’s time to enact retirement plans closer to those offered in the private sector. That’s what the former principal deputy commissioner of the Social Security Administration, Andrew Briggs, suggests. He authored the new AEI study.
Just as with Social Security, benefits should be based on an employee’s career earnings, not the final three years of wages. And public-sector retirement benefits should shift to a defined-contribution, hybrid or cash-balance plan.
The Nevada Public Employee Retirement System isn’t a game, but it, its millionaire retirees and Silver State taxpayers are quickly running out of lifelines.
Chantal Lovell is deputy communications director at the Nevada Policy Research Institute. For more, visit http://npri.org.
A version of this commentary first appeared in the Reno Gazette-Journal.