How NVPERS, step by step, made Nevada government employees some of the nation’s richest
To tell the tale of the troubles facing Nevada’s Public Employees’ Retirement System — and thus, also, the need for serious reform that now confronts the taxpayers of the Silver State — nothing substitutes for a simple walk down Memory Lane.
So that’s the approach this white paper takes — examining the actual legislative history of NVPERS over the decades.
Such an examination is quite revealing and offers important insights — such as:
• How the complexity of public pension plans allowed a coalition of public unions and the NVPERS board — functionally a public union itself — to regularly mislead Nevada legislators over 30-plus years and, at tremendous cost to taxpayers, stealthily enhance public pensions.
• How this ever-increasing enhancement of benefits is a primary source of NVPERS’ soaring unfunded liability — playing a bigger role, indeed, than the market collapse of 2008. Most clearly, this is revealed by the extraordinary enhancements given police and fire personnel, when their compensation was already well above the national average.
• How a flawed approach to pension funding — an approach rejected both by private U.S. pension plans and even the public pension plans of most other nations — encourages NVPERS to bet big, when most experts are advising caution. To justify its 8 percent discount rate, NVPERS has now allocated more of its portfolio to risky assets than at any other time in its history. This makes the system exceptionally vulnerable, should the market downturn that most experts predict within the next decade occur.
• How Nevada’s public-pension debt grew so great that — should another serious market collapse occur — Nevadans would be unable to bail NVPERS out. In that scenario, retirees would face almost certain benefit reductions.
• Why governments, finally, are ill-equipped to provide public pensions: Financially naïve citizen-lawmakers can too easily be lobbied and/or intimidated by public unions into approving legislation that enriches union members at the expense of the general public. Because the costs of the schemes are essentially hidden in the pensions’ actuarial complexity and are extended out over future generations, compliant lawmakers escape election accountability. Repeatedly, over the past 30 years of Nevada’s legislative sessions, this has been the pattern. Starting with a sizable increase that was laughably referred to as “fixing a discriminatory provision,” enhancements are now so rich that men in their 40s are drawing $100k-plus “retirement incomes” while working full-time for other governments.
Read the entire report here:
Footprints: How NVPERS, step by step, made Nevada government employees some of the nation’s richest