The Nevada Senate on Monday voted unanimously to approve a bill making major changes to the Public Employee Retirement System, including reducing the annual credit toward retirement from 2.5 percent of salary to 2.25 percent.

Bags-Of-Money-Dollar-Signs-Bills-CoinsThe Nevada Senate on Monday voted unanimously to approve a bill making major changes to the Public Employee Retirement System, including reducing the annual credit toward retirement from 2.5 percent of salary to 2.25 percent.

Senate Majority Leader Michael Roberson, R-Las Vegas, said the changes will make a major difference in the cost of PERS.

“This bill is conservatively estimated to save PERS about a billion dollars every decade,” he told fellow Senators.

SB406 says that any PERS employee convicted of certain felonies related to their duties of employment forfeits all rights and benefits to a retirement. That includes accepting bribes, embezzlement or theft of public money, perjury and conspiracy.

The bill orders that PERS return those felons, without interest, all contributions they have made to the system.

It also mandates that other than police-fire members, retirees be at least 65 before retiring if they have five years of service, 62 if at least 10 years service, age 55 if they have 30 years of service.

Public employees with 33 1/3 years of service would be allowed to retire at any age without having their benefit reduced.

The legislation applies only to those public employees hired on or after July 1 of this year. SB406 goes to the Assembly for consideration.

For any member killed in the line of duty or in the course of their employment, the bill authorizes the surviving spouse to receive either 50 percent of the deceased worker’s salary or 100 percent of their retirement allowance, whichever is greater.

SB406 also mandates that, going forward, all judicial members of PERS pay half of their retirement premiums. Existing judges don’t contribute to their retirement.

The Senate also passed Roberson’s bill changing some of the rules surrounding collective bargaining by public employee groups.

First, SB241 excludes school administrators who make more than $120,000 from membership in a collective bargaining unit. In addition, it requires that a new school principal become an at-will employee during his or her first three years in that job and returns the principal to at-will status if, for two years in a row, the school’s rating drops or if half or more teachers in the school ask for a transfer.

It doubles the number of bargaining sessions employee groups must participate in before they can push the contract to an arbitrator and requires that an arbitrator be selected at least 330 days before the end of the existing contract.

SB241 was approved on a 15-4 vote with Democrats Tick Segerblom and Debbie Smith absent.

Lawmakers Debate Makeup of PERS Board

moneyBy Sean Whaley

CARSON CITY – A bill seeking to change the makeup of the public employees retirement system board to include three public members with areas of expertise in pension plans ran into resistance Monday from some lawmakers and participants in the plan.

Opponents offered a common refrain: the plan is well managed and no changes are needed.

Assembly Bill 3, sought by Randy Kirner, R-Reno, would change the makeup of the current board, which is now composed of seven members, all of whom are participants in the plan. Testimony lasted for more than two hours. No immediate action was taken on the measure.

Kirner, who has made reforms of PERS a priority in the 2015 session, said a public perspective would help the board manage the plan’s $35 billion in assets and long-term unfunded liabilities of $12.5 billion.

Kirner and some other Republicans, including Gov. Brian Sandoval, would like to change the public pension plan from a “defined benefit” plan, where retirees are guaranteed a monthly pension based on years of service and salary, to a “defined contribution” plan, where employees manage their own investments much like a 401(k) plan. A defined contribution plan would have no unfunded taxpayer liability.

Kirner plans to introduce such a bill later this session. It would only affect newly hired public employees.

Kirner said his bill to change the makeup of the board is not based on any concerns with the performance of PERS or its current board, but is intended to bring a public perspective to the management of the plan. The plan is funded by taxpayers who should have representation on the board, he said.

A packed hearing room, with overflow rooms holding even more attendees, saw a lot of opposition to the bill.

Assemblyman Richard Carrillo, D-Las Vegas, said a recent assessment of Nevada’s public pension plan by the national firm of Aon Hewitt described its actuarial funding policy as “best-in-class.”

The evaluation suggests no changes are needed, he said.

Assemblyman Glenn Trowbridge, R-Las Vegas, a PERS member as a retired Clark County parks and recreation director, said it was public members of the board in the mid-1980s who advocated for some bad investments by the plan, including a dog track in Henderson and the Rivera Hotel.

The suggested changes appear to be a step back, he said.

The board makeup was changed by the Legislature in 1987 to be composed of all public employee participants.

Tina Leiss, executive officer of PERS, said the board opposes the bill because the current system is a model of best practices. The removal of the private sector members in 1987 was done to take politics out of the management of the plan, she said.

Changes approved by the voters in the mid-1990s to protect the system were due in part to concerns that public pension plans could be raided and used for other purposes, Leiss said.

The plan is also overseen by a panel of state lawmakers who serve as the Interim Retirement and Benefits Committee, she said.

The board changes were supported by both the Reno-Sparks and Las Vegas Metro chambers of commerce.

Tray Abney, director of governmental relations for the Reno-Sparks chamber, called Kirner’s proposal a reasonable change to make to the PERS board.

“This should have been done a long time ago,” he said.

The purpose of the bill is to have some board members who are outside the system and don’t have a vested interest in the plan, Abney said. Even with the change, two-thirds of the board will still be PERS members, he said.

Hey Nevada – You won’t believe what your government is doing with employee pensions

moneyPERS contribution rates now up to 4 times higher than 52 years ago

Unfunded liability has ballooned to over $40 billion despite rising contribution rates

By Victor Joecks

In 1948, employees and employers in the Public Employees’ Retirement System of Nevada each contributed 5 percent of an employee’s salary to PERS to cover future retirement costs. Then, in 1963, that percentage rose to 5.75.

Receiving an employer match of 5 to 5.75 percent of one’s salary is not unusual for many private-sector employees.

Today for Nevada’s public sector, however, combined contribution rates have risen to 25.75 percent for regular government employees and 40.5 percent for police and fire.

Similarly extraordinary are the benefits that many Nevada public-sector retirees are cashing in.

In 2013, full-year equivalent pension payouts for 998 PERS retirees exceeded $100,000 each. Ten pensioners drew pensions paying over $200,000 annually.

Those payouts are determined, for government employees, by the highest three years of earnings — which include multiple categories of pay beyond the official base salary.

Examples are longevity pay, callback pay, multiple forms of premium pay, end-of-career promotions or just spending one’s last few years as a firefighter in Laughlin.

These are the ploys that allow government workers to inflate their pensions into the stratosphere.

Private-sector workers, of course, face a different reality: Their returns reflect amounts invested and subsequent investment earnings. In contrast to government workers, extra investments made at the end of a private-sector worker’s career, when his income is at its highest, have less time to accumulate interest.

Another difference is when those benefits can be collected.

Read the full commentary

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PERS premium to increase again in coming biennium

money blackholeThe retirement premium paid by state workers and other non-police/fire public employees will increase again this coming biennium.

Actuaries recommended and the Public Employees Retirement Board approved a 2.25 percent increase to a total of 28 percent of salary effective July 1.

The vote at last week’s meeting was unanimous.

PERS Executive Officer Tina Leiss said that amount will be split 50-50 between the employee and employer. So, unless the governor finds a way to give state workers a small raise, it effectively reduces take home pay for state employees by 1.15 percent.

She said there were a number of factors that made the increase necessary including what they refer to as “mortality.” That is a reference to the fact that state retirees are simply living longer, therefore collecting their retirement for a longer period than in the past.

The state’s share of the 2.25 percent increase will cost state government about $10 million a year. But the increase also applies to the rest of the 88,700 regular employees in public service with governments throughout Nevada.

There are also about 11,300 public employees in the police/fire category who pay a much different rate for their pension benefits. Leiss said their rate will remain at 40.5 percent total for the coming two years.

Despite that increase she said PERS had a great year in its investment portfolio, growing the total amount of assets by a whopping 17.6 percent to $33.6 billion. She said that reduces the plan’s unfunded liability from $12.9 to $12.5 billion.

source: http://www.nevadaappeal.com/news/government/13887806-113/increase-percent-state-employees