The head of the Public Employee Retirement System told lawmakers Thursday that the retirement contribution rate has to increase by 2 percent for the coming biennium.
Since that premium cost is split 50-50 between the employee and the state, it translates to a 1 percent cut in take-home pay for all state workers. For many school district and local government employees, those premiums are paid 100 percent by the government involved so only the employers, not the workers, are impacted.
The reason for the increase boils down to the fact that the cost of supporting the program must be borne by a public employee population that has shrunk dramatically because of layoffs and staff reductions during the recession, said Dana Bilyeu, executive officer of PERS. Spreading the same costs over a smaller population means the rate must go up.
For regular workers, the rate will rise from 23.75 percent to 25.75 percent. For police-fire employees statewide, the rate also will rise but only by three-quarters of a percent to 40.5 percent.
PERS provides retirement services for not only state workers but all governmental entities in Nevada. Bilyeu said it now has 188 participating employers.
The plan currently has more than 98,500 active members and about 50,00 retirees.
Bilyeu did, however, have some good news for those covered by PERS: Over the past nearly 30 years, PERS has averaged an 9.5 percent return on investments. The exception, she said, was 2009 when PERS investments lost 15.8 percent. Bilyeu said that is far better than most similar plans whether private or public, most of which were negative 25 percent or more that year.
But this fiscal year so far, she said, the plan's investments are up 9.1 percent and the total value of the fund has grown to $28 billion - the highest point ever. That leaves the plan just over 71 percent funded. That means the plan had an unfunded liability of $8.7 billion as of June 30.
Both she and Danny Thompson, head of the AFL-CIO and a supporter of PERS, said for the majority of PERS members, the plan is their only retirement income since they don't qualify for Social Security unless they did so before joining a governmental workforce.