Growing cost of PERS raises worries
By: Anjeanette Damon
Reno Gazette-Journal
More than 52,000 people — former teachers, firefighters, mechanics, football coaches, engineers, police officers and janitors among them — rely on Nevada’s Public Employees’ Retirement System for some or all of their retirement income.
Another 100,000 or so people are in the pipeline to become beneficiaries of PERS.
But the financial stability of the system central to the livelihood of so many is becoming increasingly expensive for governments to maintain — largely because of the growing cost of funding benefits for existing employees as well as playing catch-up for inadequate funding in the past.
The administrators of PERS maintain the fund is actuarially sound — it is meeting its obligations, the government employers are making their mandated contribution payments, and measures are being taken to ensure the plan will become fully funded in 22 years.
“We are paying all liabilities as they come due, and we are well-positioned to pay all future liabilities as they come due,” said Tina Leiss, executive officer of PERS. “We have a $32 billion trust fund that is used solely to pay the benefits of the retirees.”
Independent studies have also shown that Nevada’s is among the healthier plans compared to similar systems across the United States because of the conservative way in which it is managed.
But that comparative report doesn’t necessarily mean the system is healthy, particularly because many of the same problems plague all similar plans across the country. According to a 2012 analysis by Pew Charitable Trusts, a national $757 billion gap existed between states’ assets and the cost of their pension obligations — a number that is growing.
Nevada’s unfunded liability accounts for $12.8 billion of that growing gap.
“It’s a mathematical issue. Math doesn’t play around,” said Robert Chisel, the city of Reno’s finance director. “If the unfunded liability is growing, something is wrong with (the actuaries’) assumptions. We will very likely continue to have to increase our contributions.”
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Quote:
“But the financial stability of the system central to the livelihood of so many is becoming increasingly expensive for governments to maintain — largely because of the growing cost of funding benefits for existing employees as well as playing catch-up for inadequate funding in the past.“ – Anjeanette Damon, RGJ
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