PERS costs, tied for highest nationwide, ignite member complaints

Robert Fellner

Update: The July 1, 2019 rate hike will increase Nevada PERS costs to 29.25 percent of pay — leaving members paying the highest rates in the nation. 

Ever wonder which state’s government workers pay America’s highest public pension costs?

Nevada, says a research and advocacy group for the U.S. public pension industry.

According to a just-released report from the National Association of State Retirement Administrators (NASRA), Nevada PERS members — at 14 percent of pay — are in a virtual tie with Ohio and Missouri teachers for the highest employee contribution rate of any public pension plan nationwide.

That finding significantly contradicts claims made by PERS officials last year in a board discussion of rank-and-file complaints about rising rates.

PERS investment advisor Ken Lambert suggested that members had no reason to complain, stating that, “our contribution rates are approximately 4 percent below the average rate in the country. So you could walk in and say ‘well you guys are mad at 28? The average rate is 33, so let’s just go to 33.”

The NASRA report, however, shows something quite different.

PERS members were clearly complaining about their half of the total 28 percent rate which, contrary to Lambert’s implication, is amongst the highest nationwide.

In fact, according to NASRA, PERS members pay 75 percent more than the national median.

The chart below shows the median employer and employee contribution rate for pension plans whose members, like those in PERS, do not participate in Social Security:

Median contribution rate for U.S. public pension plans

Even the national median combined employee and employer contribution rate — 23.7 percent — is much lower than the 33 percent rate Lambert cited. While NASRA’s data are medians and Lambert cited an average, little substantive difference is likely to exist between the two values. In addition, the median — which is the rate used by the middle plan, with half of plans using a lower rate and half using a higher one — is a more appropriate metric to use.

The chart also reveals how the past funding failures of public pension plans nationwide are being foisted onto the current generation. While this added cost is typically paid by government employers and taxpayers, Nevada state law mandates that all costs be split 50-50 between employee and employer — although evidence suggests law enforcement is not being held to that rule.

Consequently, Nevada public school employees have become uniquely aware of the growing costs needed to bail out PERS. Those costs — discussed in more detail here and here — effectively function as a tax for which these employees receive no additional benefit.

Sending 14 percent of each paycheck to PERS seems as if it would entitle members to ask questions and, most importantly, receive accurate answers to those questions.

Yet, far too often the Retirement Board and its investment advisor appear to be more concerned with muting their members, and pushing politically favorable narratives, rather than honestly addressing their concerns.

Going forward, PERS board members should endeavor to provide members with the substantive answers and thoughtful analysis that they deserve, regardless of what that means for political optics.

Robert Fellner is the director of transparency for the Nevada Policy Research Institute, a nonpartisan, free-market think tank. To learn more about PERS visit www.npri.org/issues/detail/pers.

Robert Fellner

Robert Fellner

Director of Policy

Robert Fellner is NPRI’s policy director and joined the Institute in December 2013. 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, RealClearPolicy.com, the San Diego Union-Tribune, the Wall Street Journal, 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.