Retirement system still strapped
Meeting fails to yield any solution to state plan's $6.5B shortfall
Hours of listening to numbers didn't add up to any solutions Thursday to the state retirement system's $6.5 billion shortfall, now expected to grow even bigger because of "double-dipping" by rehired retirees.
Members of the Legislature's Retirement and Independent Entities Committee offered no recommendations at what is expected to be their final meeting before the 2010 legislative session begins in January.
That despite sitting through four hours of testimony, including a lengthy analysis showing the retirement system could run out of money in under 30 years if the government's contribution isn't increased.
The value of the retirement-system fund fell to $15.9 billion as a result of last year's stock-market plunge. The analysis showed the current 13.25 percent contribution would have to go up by 10 percent or more over the coming years, depending on the fund's earnings.
The committee also heard details of a legislative audit released Wednesday that warned that continuing to allow rehired retirees to collect both a pension and a paycheck could cost the retirement system $900 million over the next decade.
About the only good news the committee got was from the retirement system's executive director, Robert Newman, who announced the fund had earned an extra $1 billion so far this year above the anticipated return of 7.75 percent.
Even so, the committee's Senate chairman, Sen. Dan Liljenquist, R-Bountiful, said that won't solve the problem. "Even if we have better-than-expected returns for the next 40 years, we still need more money," he said.
The options presented to the committee by the retirement system's actuaries focused on ways to soften the blow of increasing the government contribution to the retirement system.
Those options included reducing the benefit package for future hires, requiring current employees to contribute toward their retirement and eliminating the government's contribution to employees' 401(k) plans.
Still, all of the options presented would add up to about $45 million in savings annually, according to actuary J. Christian Conradi. And, he said, there could be legal challenges to the changes.
Most of the committee's discussion centered on the audit that, for the first time, put a price tag on the practice of "double-dipping." The audit recommended that Utah follow the lead of other states and suspend the retirement benefits of government employees who go back to work.
Sen. Jon Greiner, R-Ogden, who also works as Ogden's police chief, raised the most concerns about the audit. He retired as police chief in 2003 but stayed on under a provision that allows top law enforcement officials to "retire in place" and earn both a pension and a paycheck.
Greiner pressed the auditors about the percentage of all government employees who retire and then return to work. "We're dealing with one half of one percent," he said. Later, Greiner told reporters he needed to study the issue further. "There's a lot of things on the table," he said. "We have to weigh them out."
Bountiful Police Chief Tom Ross told the committee some of the benefits public-safety employees receive "make it look like we are somehow greedy or taking advantage of a system that is unfair." He said the benefits are offset, for example, by having to work longer hours with only limited overtime.
e-mail: lisa@desnews.com
Recent comments
It is true that some people can work and retire before the age of 65...
Bob | Nov. 30, 2009 at 7:59 a.m.
Why has the state lost more money when the market has rebounded....
Poor Investors | Nov. 13, 2009 at 2:55 p.m.
It's a no brainer !
STOP the double dipping to help the situation !...
john | Nov. 13, 2009 at 1:59 p.m.
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