Nevadans could see $6 billion increase in pension debt, as economy falters

Robert Fellner

Nevada Policy has written extensively on the hidden risk associated with Nevada’s public pension system (PERS).

A new tool from the Reason Foundation allows users to get a sense of the magnitude of the risks associated with current funding practices. According to their projections, if Nevada PERS records a 5 percent investment loss this year — a distinct possibility given their current status — the system’s debt will explode from $14 billion to nearly $20 billion.

This would require a significant increase in the costs imposed on taxpayers and public workers, continuing the decade-long trend of requiring both groups to pay more, while getting less in return.

This outcome reflects a system which intentionally pushes costs onto future generations. The most prominent example of this approach, and most dangerous, is the treatment of assumed future investment returns as certain. Consequently, when investments do underperform, like in the current economic recession, the resulting cost increase only appears after the fact — precisely when taxpayers and government employers can least afford it.

A proper funding approach would recognize the impact of investment returns after they had been realized, rather than before. Such an approach is mandated for private U.S. pension plans as well as public and private pension plans in most of Canada and Europe.

To get a sense of the full range of possibilities, and thus the range of risk being imposed on public workers and taxpayers, whether they like it or not, be sure to explore the new interactive tool from the Reason Foundation: Previewing the COVID-19 Impact on State Pension Plans.

Robert Fellner

Robert Fellner

Vice President & Director of Policy

Robert Fellner joined the Nevada Policy Research Institute in December 2013 and currently serves as the Institute’s Vice President and Director of Policy. Robert has written extensively on the issue of transparency in government. He has also conducted legal research and assisted in crafting legal arguments for numerous public records-related lawsuits, including one which prevailed at the Nevada Supreme Court, resulting in a landmark decision that protected and expanded Nevadans’ rights to access and inspect government records.

An expert on government compensation and its impact on taxes, Robert has authored multiple studies on public pay and pensions. He has been published in Business Insider, Forbes.com, the Las Vegas Review-Journal, the Los Angeles Times, the Orange County Register, RealClearPolicy.com, the San Diego Union-Tribune, the Wall Street Journal, the Washington Examiner, ZeroHedge.com and elsewhere.

Robert has lived in Las Vegas since 2005 when he moved to Nevada to become a professional poker player. Robert has had a remarkably successfully poker career including two top 10 World Series of Poker finishes and being ranked #1 in the world at 10/20 Pot-Limit Omaha cash games.

Additionally, his economic analysis on the minimum wage won first place in a 2011 George Mason University essay contest. He also independently organized a successful grassroots media and fundraising effort for a 2012 presidential candidate, before joining the campaign in an official capacity.