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EDITORIAL
Pension reform
Tools
The board of Nevada's Public Employees Retirement System authorized its staff Wednesday to hire a firm to study the benefits of switching to other ways of paying retirement benefits.
Dana Bilyeu, PERS executive officer, said there's been much national discussion of whether public employee pensions should be set up as "defined benefit" or "defined contribution" plans.
Ms. Bilyeu said it makes sense to study what's happening across the country. Board members unanimously agreed to her request, though none indicated whether they'd like to change to a defined contribution plan or not.
The study should be completed in October.
The contribution rate that taxpayers must fund to cover future retirement benefits for government employees has steadily increased because PERS offers a "defined benefit" -- in essence, a promise that we will pay retirees a fixed amount no matter what the economy or our tax receipts look like when the day comes.
And PERS currently has only about 75 percent of the funds needed to cover all future promised payments.
The Pew Center for the States found in February that only five states have fully funded retirement plans, and there now exists a $1 trillion gap between the $2.35 trillion states presently have in hand for pensions and the $3.35 trillion they will eventually need to pay.
With a defined contribution plan, employers and employees would not constantly be paying more and more to reach the fully funded level, says Geoffrey Lawrence, an analyst with the Nevada Policy Research Institute.
The rates paid by employers and employees would not change, while the amounts that employees receive in pensions would depend on how well they invest the funds set aside for their retirements.
Public employee unions can be expected to fight the change, since it would put their members in the same position as a typical private-sector taxpayer dependent on a personal 401(k) plan. The value of such retirement funds -- and thus the monthly disbursements a retiree can expect to draw from them -- can move up and down with the value of the stocks and bonds in which such funds are invested.
The danger, then, is that the report ordered up Wednesday will merely end up sitting on a shelf, like so many others.
Nonetheless, the shift to "defined contributions" is necessary and inevitable, and such a study is a good step.
The main benefit of such a shift is that it will allow municipalities to get a handle on employee pension obligations, instead of assuming taxes can always be raised to meet exorbitant promises made in the past.
But there's also a secondary benefit worth considering. Increasingly, one of the main drags and dangers to appreciation of private-sector stocks and bonds is government taxation and regulation. Once government employee pensions are shifted to a "defined contribution" standard, every government attack on the profitability of private enterprise stands to damage the value of the pension funds of the very government regulators carrying out the attack.
And that's something they ought to have to worry about -- right along with the rest of us.
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I cannot wait for the fall of the pulic sector...Amen !
patrick, go to bed.
Teacher,
1) There is nothing wrong with ideology - ideology is merely a set of ideas connected logically with available evidence.
Sometimes it is right, sometimes it is wrong. Also note, everyone has an ideology of some sort.
2) The bad problem is when people hold onto beliefs despite available evidence suggesting they are wrong.
You seem to suggest NPRI doesn't adhere to the facts, but then please explain why no body on the political left is capable of addressing the points they make?
Take for example education spending. We've increased spending 180% since 1959 *that is per pupil and yes, adjusted for inflation). Yet no one can say spending has produced greater achievement. We've doubled spending since 1980 and student achievement is largely flat over that time as well.
In fact over 130 academic studies on spending and student achievement find no correlation - that is the vast majority of the studies btw.
This suggest the additional spending is NOT producing results. So why does one side (your side)want to keep spending more money?
One answer is they are basing the idea that more spending will produce student achievement on faith alone (and they're burying their heads in the sand to hide from the facts).
If you want to debate the facts, I'll debate you or anyone else, any time, any place.
Gee wiz, if someone would have told me that my $54,000/year government job was going to cause the fall of mankind, I would have re-thought my career decision! If I had known, I would have become the publisher of the Review Journal and spent the remainder of my time spewing out false and clearly misleading information about how government employees are the source of all evil, bad things that happen to everyone, everywhere! Maybe there's stll some hope that I can change my guilt-ridden existence and get a journalism degree. Hopfully, there is still time to change my life for the better of society and become a misinforation-spreader for the Review Journal! At least then, I would not be responsible for all of mankinds ills. How could I have been so misguided?
Maybe if their pensions were subject to the same taxation and regulation, these people wouldn't be so quick to start finding new ways to tax these investments
As a teacher I'd sure like to see this report sit on the shelf with all the reports commissioned over the last 20 years that have told Nevada it drastically under spends on education and has a completely outdated tax system. The defined benefit program is the only thing that somewhat offsets the pittance teachers are paid and 22% of my salary is paid into that. Those salary numbers are readily available online where salaries of public employees are listed. Remember to look from the bottom for teachers because that's where you'll find them. The Review Journal opinion pieces can't really be taken seriously anyway since they consistently go about quoting from supposed "researchers" like NPRI as they do in this one. Pure ideology masquerading as "research." Also, whoever writes these pieces should really sign their name to them instead of hiding behind the anonymity of the opinion page.