Week in Review: spin

Andy Matthews

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.

The Nevada Policy Research Institute made headlines recently when we revealed that individuals’ government pensions in Nevada are often higher than their paychecks.

Predictably, our analysis drew a critical response from PERS officials, who took exception to our findings. Yet just as predictable was that nowhere in their response did those PERS officials point to even a single error in our study’s findings. Instead, PERS and its defenders have resorted to furious attempts at spin.

On the other hand, it’s easy to identify an error made by state Sen. Tick Segerblom in his recent letter to the editor published by the Las Vegas Review-Journal, through which the senator enlists himself in PERS’ spin campaign. To wit, Sen. Segerblom writes that the study “offers no information about the methodology used in generating its numbers.”

Of course, anyone who so much as skimmed the analysis would have found the methodology clearly outlined, beginning on page 3.

Sen. Segerblom and PERS officials’ main beef with this study was that the analysis looked just at those government workers who retired from 2011 to 2013 and had at least 30 years of service credit. For those retiring from local government, the average pension was over 100 percent of their final base pay. School district retirees collect 89 percent of their base pay. Police and fire employees rake in over 114 percent of their final base pay as retirement payouts. 

What the critics are ignoring is that NPRI limited the study to recent retirees in order not to inflate those percentages. Had NPRI analyzed the pensions of all 30-plus-year retirees in the system, the average pension would have been far greater than their final salary due to the numerous COLA increases older retirees have received. The pensions of 2011-2013 retirees — those included in the study — have yet to be inflated by such cost-of-living increases.

NPRI’s findings echo what a national expert has found as well. The former principal deputy commissioner of the Social Security Administration, Andrew Biggs — a resident scholar at the American Enterprise Institute — found in 2011 that the average Nevada PERS retiree can expect to receive a pension benefit 55 percent greater than his comparable private-sector counterpart.

Last year, comparing pension benefits in Nevada to those offered in the 49 other states, Biggs found that Nevada PERS leads the nation with the highest average pension benefit for full-career retirees: $64,008 a year. And keep in mind, a full career in government means working just 30 years, not the 45 years or so needed in the private sector.

The reason NPRI’s study looked at just those with 30 years or more of service credit was to discover how pension benefits are distributed among its members.

According to its just-released 2014 PERS actuarial data report, PERS’ 48,729 retirees had an average of 20 years of service and a pension of $35,598, which is more than the maximum Social Security benefit available with 35 years of work at 67 years old.

There’s a reason PERS doesn’t want NPRI pointing out how unevenly that average is distributed.

PERS’ 10,357 full-career retirees now have pensions of $64,913 and begin collecting their income-replacement-level pensions immediately, even if they “retired” in their 40s. Those with less time in service have to wait until their 60s.

What those two statistics and the findings of NPRI’s recent study reveal is the inequity in the current system. PERS provides a windfall for those who make it to the 30-year mark at the expense of the vast majority of PERS retirees who work fewer than 30 years and receive disproportionally smaller benefits than their full-career counterparts. Indeed, local government employees who work for less than five years receive nothing at all. They can’t even roll over their “share” of retirement contributions.

Sen. Segerblom and PERS officials are defending a politically favored elite — the less than 1 percent of Nevadans who will work for government for 30 years and receive those exorbitant pensions.

NPRI, on the other hand, favors pension reform, like moving to a hybrid system, which would help the people — the 99 percent, if you will, including teachers, police officers and nurses — who won’t make it to 30 years of service. And it would protect taxpayers, too.

(By the way, for a few more great additions to this debate, see here and here, as well as a piece our own Chantal Lovell wrote on this yesterday.)

As always, thanks for reading, and I’ll see you next time.

Andy Matthews
NPRI President

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