Week in Review: Retirement
Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.
Do you ever have one of those days that are so hectic you find your mind wandering off, dreaming of the day you get to retire and spend the rest of your life on some distant, tropical island?
For most of us, such thoughts are nothing more than dreams we use to get through the grind.
But for government retirees in Nevada, such thoughts may be more realistic than not. As revealed in our new analysis of Nevada Public Employees’ Retirement System data now available on TransparentNevada.com, many public employees get a pay raise upon retirement.
That’s right. Many full-career government retirees in Nevada are receiving more than their final year’s base pay once they retire. Considering most of the taxpayers who fund those rich retirements receive far less after they quit working, and that NVPERS has an unfunded liability around $40 billion based on a realistic rate of return, the findings are something that should give everyone in Nevada, especially policymakers, pause.
Fortunately, the study received some great media attention. In addition to being discussed on multiple radio shows across the state, Nevada’s largest paper, the Las Vegas Review-Journal, featured the study as its lead story on the front page of Thursday’s edition, and as its top story online. The headline called the data “shocking,” and it truly is.
According to the report, authored by our own Victor Joecks and Robert Fellner, people retiring after at least 30 years of employment with Clark County, Washoe County, Las Vegas, North Las Vegas, Las Vegas Metro, Henderson or Reno are doing so with 100.59 percent of their highest year’s base pay. Police and fire retirees receive even more, getting a 14 percent pay increase upon retirement.
In conjunction with the release, we’ve updated TransparentNevada.com to include more detailed pension information. Now, users can see retiree names, pension payments, years of employment and last employer, meaning legislators, reporters, activists and ordinary citizens now have all the information that’s necessary to make the case for pension reform in Nevada.
Last night, I spoke at a meeting of the Sun City Summerlin Conservatives about reforms made to the retirement system in Utah, which now works for both taxpayers and retirees. During the Great Recession, Utah’s public pension system saw its assets crash, right along with the stock market. Rather than require taxpayers to make significant increases in payments to the system, as we’ve experienced in Nevada, Utah legislators chose to make the system sustainable and viable for generations to come.
The State of Utah contributes 10 to 12 percent of each worker’s salary toward his or her retirement, but beginning in 2011, new employees were given a choice in what to do with that money: invest it in a 401(k), or enroll in a defined-benefit plan knowing that taxpayer contributions would be capped at 10-12 percent. The move has lessened the risk to taxpayers and eventually will cut the state’s pension liabilities. And it’s also beneficial to retirees, as the new system means they can take their retirement with them if they switch jobs, can pass the asset on to their children upon their death, and no longer have to worry that politicians will raid the fund to pay for other government expenses.
And the move was apparently popular with voters. Not one Republican who supported the plan lost in the following election. In fact, Utah Republicans picked up seats.
Fortunately, NPRI has created the framework for a similar reform in Nevada. In addition to Thursday’s PERS analysis, we’ve published multiple studies and commentaries on the subject. Most importantly, PERS reform was a key focus in our most recent Solutions book, our sourcebook for policymakers that was sent to every Nevada legislator and Gov. Brian Sandoval. And our executive vice president, Victor Joecks, has relocated to Carson City so NPRI can have a full-time voice in the capital during this important time.
It’s undeniable that PERS reform needs to be a top priority this Legislative Session. Policymakers owe it to taxpayers and public employees alike to take action.
Until next time,
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