December 19, 2010

So many say the Public Employees Retirement System (PERS) is going broke and must be reformed “before it's too late”. All of that is partisan nonsense and most of those spewing those lies know better, but they get many to believe it with specious logic and partisan politics. It is more frustrating, when they say PERS needs to be replaced solely with a 401 k or defined contribution plan.

Let me clarify by offering this:

Private sector employees get Social Security after paying into it at a current rate of 6.2 percent on income up to $106,800 per year. It is a defined benefit retirement plan based on the number of years worked, salary and age. They will get a guaranteed monthly benefit with cost of living increases. As an extra benefit, their employer may offer an optional 401k, as a way for employees to save for their future. Sometimes employers will even add a match of a specific amount or percentage.

Nevada's public sector employees get PERS retirement after paying into it at a current rate of up to 11.25 percent with no cap on contributions. It is a defined benefit retirement plan based on the number of years worked, salary and retirement age. They will get a guaranteed monthly benefit with cost of living increases, which start three years after they retire. As an extra benefit, state employees can invest in an optional 401k  called the "Nevada Public Employee's Deferred Compensation Program" as a way for them to save for their future. However, there is no match.

Finally, and most importantly, state employees do not pay into Social Security, so they have no other pension when they retire. None.

Asking Nevada's public employees to accept a defined contribution plan for their retirement is like asking private sector employees to accept a 401 k plan instead of Social Security. It is something most Americans have rejected and for good reasons. The recent economic collapse would have made millions of pensioners destitute and ever more reliant on government aid. In the future, this will happen to Nevada's public employees if forced into a 401k plan without Social Security.

So I ask those who want a 401k plan for Nevada's public employees, “Why do you want to force our public employees into a plan YOU would never accept?”