Iowa public pensions
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Iowa public pensions include the Iowa Public Employees Retirement System (IPERS), the state's largest government pension system, with 324,000 members.[1][2] In FY2011, 7,360 public employees retired, a record number, bringing the total of IPERS retirees and beneficiaries to over 100,000.[3]
Iowa has 66,631 total public employees as of 2010.[4] In Fiscal Year 2010, the state has a total of 236,258 active and inactive pension fund members, with 98,125 receiving periodic benefit payments. [5]
The system faces $5.7 billion of unfunded actuarial liability, a 1,643% increase over the past eleven years, according to the State Auditor.[6]The system has a funding ratio of 80% of assets against liabilities, down from almost 98% a decade ago.[6]
Pension Plans
| Plan | Current Value | Percentage funded | Unfunded liabilities | Total state employees | Avg. pension |
|---|---|---|---|---|---|
| Iowa Public Employees Retirement System [7] | $23.2 billion | 80 percent | $5.7 billion | 324,000 active members | $13,085 |
| Iowa Judicial Retirement System | $111 million | 67 percent | $54.9 million | 197 active members | |
| Municipal Fire and Police Retirement System [8] | $1.83 billion | 79 percent | $655 million | 3,888 active members | $33,084 |
A report from State Budget Solutions calculated the system's actual liability to be $21.3 billion as of March, 2011. The calculation was based on a different rate of return assumption.[6]
According to the United States Census Bureau, the state has 5 locally-administered pension plans.[9]
Contribution rates
As of July 1, 2011, regular IPERS members' contributions increased to 5.38%, and employers contributions increased to 8.07%, bringing the total to 13.45% of an employee's wages.[6] On July 1, 2012, contribution rates will rise to 5.78% for employees and 8.67% for employers.[6]
The state increased contribution rates for employees and employers for the Peace Officers Retirement System (PORS) so that the 2010 contribution rates are 21.00% for the employer and 9.35% for the employee, and the employee contribution will increase of 0.5% a year to 11.35% in FY2013. For IPERS, the contribution of most members other than public safety officers, EMT members and jailers under existing law will increase 1.5%[1] to a total of 11.95%, with members paying 4.7% of salary and employers paying 7.25% on July 1, 2011.[10][11]
Calculation of benefits
In 2007, the Iowa legislature institute a cap on salary growth for all employees so that a “final average salary,” as determined by the three highest years, cannot exceed 121% of the fourth highest year; it also eliminated bonuses and car or housing allowances from the calculation of final salary.[12]
As of July 2012, IPERS pensions will be based on their highest average income over five years instead as opposed to the prior calculation being based on three years. Officials expect the move to save money.[1]
Local plans
There is one local government plan for teachers of the City of Des Moines and it receives no state support.[13]
Funding levels
The state's pension liabilities can be calculated in a variety of ways, which yield different numbers. Below are the numbers as calculated by to the Pew Center on the States[14], the American Enterprise Institute[15] and Professors Robert Novy-Marx of the University of Chicago and Joshua Rauh of Northwestern University, Kellogg Graduate School of Management.[16]
| PEW | AEI | Kellogg (2009) |
| $2,694,794 | $21,266,226 | $17,000,000 |
Other information from the Pew Center on the States Feb. 2010 publication "The Trillion Dollar Gap":
| Latest liability | Latest unfunded liability | Annual required contribution | Latest actual contribution |
|---|---|---|---|
| $24,552,217 | $2,694,794 | $453,980 | $389,564 |
| Latest liability | Latest unfunded liability | Annual required contribution | Latest actual contribution |
|---|---|---|---|
| $404,300 | $404,300 | $42,991 | $16,613 |
| Number of pension plans | Pension assets ($bn) | Stated liabilities ($bn) | Funding status (% of tax revenue) |
|---|---|---|---|
| 1 | $18.1 | $24.5 | -373% |
This data is based on projected data from 2008 census data.[17] In 2008, $1.94 trillion was set aside for pensions, but it is estimated that states have $5.17 trillion in unfunded liabilities.
Rate of return
Iowa presumes a 7.50% return rate on its pension investments.[12]
Double dipping
The practice of receiving state salary while also collecting a pension from prior government service is known as "double dipping," a practice some states prohibit.[18] Gov. Terry Branstad receives a $130,000 salary as governor in addition to a state pension worth more than $50,000 from his previous service in government.[18]
Local public pensions
- Main article: Local government public pensions
According to the United States Census Bureau, the state has 5 locally-administered pension plans.[9]
Transparency
- Main articles: Public pension disclosure and Governmental Accounting Standards Board
Data availability
Financial information is available on the pension fund's own website. Data is available under the state's sunshine laws.[19]
Names of pension recipients are available.[19] Amounts disbursed to pension recipients are available.[19]
Fund performance data
Investment performance data is available on the fund's website.[20]
Rate of return
The assumed rate of return of 7.5% is available in the actuarial section of the fund's Comprehensive Annual Financial Reports.[21]
Unfunded liabilities
Unfunded liabilities are disclosed in the actuarial section of the fund's Comprehensive Annual Financial Report.[21]
Oversight
Laws are in place governing gift and hospitality exchanges involving managers and board members of public pension funds. Managers and board members are required to submit regular asset disclosure forms, which are available to the public.[22]
External auditors' reports are included in the Financial section of the fund's Comprehensive Annual Financial Reports. External audits are conducted by the Office of the Auditor of State.[21]
See also
External Links
- Iowa Public Employees Retirement System
- Iowa State Pension Fund Management - State Integrity Investigation
References
- ↑ 1.0 1.1 1.2 The Des Moines Register "Some state workers' overtime pay tops $30,000 " Sept. 5, 2010
- ↑ The Des Moines Register "Tough decisions helped IPERS, actuary reports" Dec. 3, 2010
- ↑ The Des Moines Register "Budget concerns highlighted" Nov. 23, 2011
- ↑ 2010 Annual Survey of Public Employment and Payroll, Census 2010
- ↑ 2010 Annual Survey of Public Employment and Payroll--Membership by State, Census 2010
- ↑ 6.0 6.1 6.2 6.3 6.4 "IA auditor: State pension fund shortfall grows to $5.7B," IowaPolitics.com, February 7, 2012
- ↑ 2011 IPERS CAFR
- ↑ 2012 Actuarial Report
- ↑ 9.0 9.1 "Public Employee Retirement Systems State- and Locally-Administered Pensions Summary Report: 2010", United States Census Bureau, April 30, 2012
- ↑ Teachers Retirement System Legislative Information
- ↑ Iowa House file 2518
- ↑ 12.0 12.1 12.2 12.3 Pew Center on the States "The Trillion Dollar Gap" Feb. 2010
- ↑ National Conference of State Legislators "State Government Subsidies for Retirement Plans Sponsored by Local Governments" Jan. 2010
- ↑ "State Pensions and Retiree Healthcare Benefits: The Trillion Dollar Gap,” Pew Center on the States, accessed January 4, 2011
- ↑ Biggs, Andrew, “The Market Value of Public-Sector Pension Deficits,” AEI Outlook Series, no. 1 (2010)
- ↑ Novy-Marx, Robert and Joshua Rauh, 2010, "Public Pension Promises: How Big Are They and What Are They Worth," Journal of Finance (forthcoming)
- ↑ Northwestern University, The Liabilities and Risks of State-Sponsored Pension Plans, May 2010
- ↑ 18.0 18.1 The Des Moines Register "Branstad won't cut his salary to help balance state's budget" Feb. 17, 2011
- ↑ 19.0 19.1 19.2 Sunshine Review, Public Pension Disclosure
- ↑ Investment Returns
- ↑ 21.0 21.1 21.2 Financial Publications
- ↑ Iowa, State Pension Fund Management, State Integrity Investigation
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