Panel reviews bill to alter pension fund, tackle liability
Panel reviews bill to alter pension fund,
BY MICHELLE RINDELSASSOCIATED PRESS
CARSON CITY, NEV.
A Republican-backed bill that would significantly change the Nevada Public Employees' Retirement System got a closer review Wednesday from a legislative money committee, as rooms nearly full of opponents looked on.
The Assembly Ways and Means Committee combed through the details of AB190, which aims to transition the public pension program into something more akin to a private 401(k) plan.
Bill sponsor Assemblyman Randy Kirner, R-Reno, said the measure addresses the system's $12.5 billion unfunded liability — the amount PERS has promised to employees beyond what the fund currently holds, and a number Kirner said has grown 547 percent in the past 15 years.
"Are these trends causing a problem? I submit to you that they are," he said.
The measure would add a defined contribution option for employees hired after mid-2016 that would limit pension payouts based on how much money public employees contribute. The existing "defined benefit" plan promises employees a specific payout upon retirement, but Kirner said investment returns that fall below predictions have fueled the growth of the unfunded liability.
The defined contribution plan will help control the debt, and the portability of the plan will be attractive to a generation of younger workers that tends to switch jobs more often, Kirner said.
The bill also caps payouts to retirees in the traditional plan at no more than 133 percent of the income the employee earned during their three highest-paid years. Participants would have to work until the Social Security retirement age of 67 to receive full benefits under the bill, or 57 if they are a police officer or firefighter.
Public Employees' Retirement System chief Tina Leiss raised a laundry list of concerns about the bill, arguing that it doesn't provide a way to pay down the existing unfunded liability. The state is on track to pay down the $12.5 billion in 22 years but would be thrown off if new hires enroll in the defined contribution plan and stop paying toward the debt.
"If we don't continue to get the same amount of money to pay that," Leiss said, "it will grow."
She said current employers and employees would have to increase their contributions by 15 percent to keep paying down the unfunded liability — about $700 million to $800 million a year.
Leiss also argued that the plan might pay out so little to employees that they would need to draw Social Security benefits, and that would require additional contributions from the state.
Kirner has disputed the large fiscal note.
"We have a difference of opinion with the executive officer on many fronts," he said in March.