PERS gets more money
M ississippi leaders like to talk about how they’re shrinking state government. That’s fine, but one of the rising costs of this effort is taxpayer contributions to the Public Employees Retirement System.
Last week the PERS board voted to increase the employer contribution to the retirement fund to 17.4 percent of salaries starting in July 2019. That is an increase of nearly 2 percentage points from the current 15.75 percent. In dollars, the higher rate will bring in another $100 million annually.
The rate is going up because current projections show it would allow PERS to meet its goal of, by 2042, having its assets equal to at least 80 percent of what it expects to pay retirees. Right now the agency only has 61 percent of what it needs to pay future benefits, a difference of $17 billion.
Calling it an employer contribution, however, downplays the fact that the money for this contribution is coming from taxpayers. And this increase means that public money is paying more than one-sixth of each employee’s salary into the retirement program.
That’s a lot, even when you consider the truth that public salaries generally are lower than those of comparable jobs in the private sector.
Let’s acknowledge here that public employees — PERS covers those who work for state agencies, public schools, universities and community colleges, cities and counties and other entities — often perform challenging and thankless jobs. These workers deserve a properly-funded retirement program that includes contributions from employers or taxpayers, whichever way you wish to describe it.
But 2042 is a long way away, and there is no guarantee that the contribution increase for 2019 will be the last one needed. For example, if the annual returns on PERS’ investments decline by even a small amount, it will make it more difficult to reach the agency’s financial goals.
One solution to this problem would be to increase contributions by hiring more employees. More workers means more people contributing to PERS. But that runs counter to the Republican majority’s goal of smaller government.
Another unlikely solution is to reduce the payments to retirees. Good luck with that; not only is it unfair to former workers, but they certainly would remember anybody who suggested it the next time elections roll around.
The most logical solution to any future funding problems is this: If PERS does require another increase in the future, it should come from the employees themselves.
Currently, 9 percent of their pay goes to the retirement fund. That will not change in 2019, so employers (taxpayers) will be paying nearly two-thirds of the money PERS receives.
Few if any private-sector programs are that generous, with the employer contributing $2 for every dollar from the worker. By that measurement, while Mississippi’s public employees are giving up salaries on the front end, their retirement plan appears to be more than fair.