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EDITORIAL
Pension reform: Numbers behind DA's decision to 'retire'
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Updated: Nov. 13, 2011 | 9:34 a.m.
The pending retirement of Clark County District Attorney David Roger provides an opportunity to shine some light on how pensions for public employees are calculated -- and why states are facing fiscal catastrophe if they don't enact major retirement reforms.
Mr. Roger announced Nov. 1 that he would step down from his elected post on Jan. 3 after 25 years as a county prosecutor. Mr. Roger is 50 years old and will start collecting an annual pension of about $150,000 upon leaving office.
Private-sector workers must wait until they're at least 59½ to withdraw tax-deferred retirement savings without penalty. They must be at least 62 to collect meager Social Security distributions, and they must be 65 to get Medicare benefits. That's 40 to 50 years of labor before retirement eligibility.
But the Nevada Public Employees' Retirement System allows state and local government workers to begin collecting pension benefits at any age if they have worked for 30 years (for public safety workers, the threshold is 25 years). PERS also allows government workers to purchase up to five additional years of service toward their retirement eligibility, at a cost of roughly one-third their current yearly salary per year of service.
Mr. Roger purchased five years of service to reach the 30-year mark. Because his base salary is a little more than $202,000, those five years cost him around $330,000.
He had an astonishing incentive to pay that premium. Had Mr. Roger called it quits after 25 years without purchasing the five years of service, he would have had to wait until age 60 to begin collecting his pension. Moreover, based on the PERS formula that determines benefits based on years of service, Mr. Roger's pension at age 60, for only 25 years of work, would have been about $130,000. Thirty years of service guarantees the maximum PERS benefit of 75 percent of an employee's highest-earning years.
So Mr. Roger's $330,000 service purchase will allow him to collect 10 years of benefits worth some $1.5 million he otherwise wouldn't be entitled to. After taxes, he recoups his service-purchase investment in about three years.
Mr. Roger did nothing illicit or unethical. He merely exercised options available to him. This is the stark reality of the way the system works. This is the system paid for by taxpayers who have seen their savings and home values wiped out, who can only dream of retiring at age 65, let alone 50. They can only dream of buying an annuity that pays $150,000 per year for 10 years, then $20,000 per year for the rest of their lives, for just $330,000. Such a product does not exist.
At age 75, Mr. Roger will have collected about $3.75 million in pension benefits, more than he was paid during his entire prosecutorial career.
This is why, according to a study released this month by the Nevada Policy Research Institute, PERS has unfunded liabilities of more than $40 billion, not the $10 billion reported by the agency. PERS beneficiaries bear no risk. Taxpayers assume all the risk of promised pension benefits that can't be paid.
The Nevada Legislature needs to get serious about reforming PERS. If Nevada lawmakers lack the political will to put future public-sector hires into a defined-contribution, 401(k)-style retirement system, then they should at a minimum quit paying pension benefits to anyone younger than 60. The state must stop giving productive government workers incentives to quit. It's not just unaffordable, it's unfair.
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Re Big Julie's comment it costs $90 to register a motorhome in Oregon for two years. How much would that be in Nevada? Of course our hero would rather send $90 to Oregon.
Wow, now everyone is going to get upset over public pensions because the top managers get so much. Thanks RJ, because the average PRES pension is nowhere near these top outs but you will have stirred the pot and again the little guy suffers. How about a real private corporation wage for our public employees? The president of NV Energy gets about 5 million a year in cash, benefits and stock options and runs a multi-billion dollar company with thousands of employees. Don Burnette runs a multi-billion dollar county with over six thousand employees and he is paid a couple hundred thousand a year. Pay HIM five million a year and then you see that the real inequity in top management is in PRIVATE COMPANY PAY. Thanks RJ, because you again incite class warfare among the middle class and you rich people win again.
While our diminutive DA, "did nothing illicit or unethical," when it come to the financial impacts of his decision to bail on his promise to the voters of Clark County. The decision itself is repugnant and exposes Roger to the public as a tiny, megalomaniacal liar, who was never vested in the community that finaneced his $4 million retirement package, but only in lining his pocket and boosting his Fabergé ego.
Hopefully the voters will learn from this, and do a better job at the next election. Meanwhile the County Commission should vow to find someone capable of holding that office with the honesty and integrity that has been missing the over the past decade of "Roger's Rule."
The fact that PPA is considering hiring a man with such a lack of integrity and honor to represent them, should have every Metro Officer outraged. That is, if they value integtrity or honor. I guess we will find out about that,
How can the state afford to pay people 75% of their highest scale pay for life, at the age of 50? They will need to raise taxes on people who work into their 60's and beyond to afford such lavish benefits, it is not right. Mr roger if he lives the average life span he will make more in retirement than he did working, again that's not right.
Big Julie
I wounder if that Nevada hose pusher has called in sick to go to Oregon.
When are people going to get it through their thick skulls that Americans have been getting the short end of the stick for years. If it is good enough for big business to sell to Americans their goods produced in other countries at high prices it should be good enough for them to have to produce those goods in the United States.
Here we go again. There was a time people didn't want to work for the government because the pay was lousy. In order to entice workers the government offered benefits. The benefits offered were on the same level as private industry with LESS PAY. Most private businesses that offered good pay along with good benefits were large companies. These are the same companies that have been outsourcing jobs out of the country. As a result, there are drastically fewer large companies in the U.S. resulting in fewer businesses being able to pay decent benefits along with decent wages. So instead of people like EHARRIS attacking public sector employees they should be attacking our government for not doing everything possible to attempt to get big business back in this countries along with the jobs they took away.
Public workers are out in force today... No matter how they explain it they did not earn this retirement pay and these benefits will break the state. In this case the amount the state pays out will be more than he made his entire career...
2 weeks ago heading south on the I-15 a motorhome with Oregon plates towing a SUV with a Nevada firefighters plate passed me,things that make you go hhhmmmm.
What continues to astonish me is how people continue to take the point of view that if private industry got screwed then the public sector should also get screwed. Start demanding that your so-called leaders "encourage" large companies to bring jobs back to the U.S. Whether you want to admit it or not it's the mass exodus of large companies and the jobs associated with these companies that have put us in the dire situation we are in today. Small business cannot afford the benefits that are so vital to us remaining anything other than a 3rd world country. The only way we can get back to where we were is by having big business bring jobs back. Otherwise the powers to be will continue to push ill advised programs like Obamacare.