Senate Finance members said Monday that proposed increases in contributions that state and local government workers make to Nevada's Public Employees Retirement System seem necessary, though they're waiting for more comments from other lawmakers.
Contributions paid by employees into retirement accounts would increase to 21.5 percent of their pay starting next July, up from the current rate of 20.5 percent. For police and firefighters, the new contribution rate would be 37 percent, up from 33.5 percent, Dana Bilyeu, PERS executive officer, told the panel.
If approved, the rates would affect current employees and all 173 public employers in the state, Bilyeu said after the hearing. She said there's no way yet to estimate how the increased rates would affect future workers.
"I can't speculate yet about new hires because no new bills have been written," Bilyeu said, adding that retirees wouldn't see a decrease in pensions under the fund's proposed budget.
Longer life-spans, earlier retirement ages and higher salaries are reasons for increased contribution rates for police and firefighters, Bilyeu said, adding that increased longevity also affected normal employee rates.
"People are living longer and we expect to pay those benefits for a longer period of time," Bilyeu said.
The decline of the stock market and resulting impact on the fund's investments is another factor, lawmakers said.
Legislators have been told that the system is doing better than most retirement funds across the nation, but has dropped in value about 19 percent since July 1, from $22.2 billion to $18 billion because of the decline in the stock market.
The system provides retirement benefits to 37,000 retirees. About 104,000 current public employees at the state and local government level are active members of the system.
Sen. Bob Coffin, D-Las Vegas, said he's waiting to hear what the Senate Government Affairs Committee says about the proposed contribution increases.
"I would say we would be supporting these things with minor modifications," Coffin said during a break in the budget hearing. "Of course, we all have to ratify those changes, or change the changes. I don't know the answer yet."
Senate Minority Leader Bill Raggio, R-Reno, said the rate increases are necessary to deal with the system's unfunded liability, which is the estimated amount that will be paid out over time but is not yet fully covered by money paid in by employers and employees.
"It's not extraordinary. They are rates necessary in order to continue the benefits," Raggio said.
Martin Bibb of the Retired Public Employees of Nevada said PERS has experts who correctly determine what the fund needs to continue providing retirement benefits and that the proposed rate increases are needed.
"It's a shared rate. It's an employer-employee rate and that's just part of what they have to do to make sure that this is fully and correctly funded," Bibb said. "And that's the bottom line. That's what needs to be done."