and now he won't be able to say it was never there.
Iowa Public Employees Retirement System (IPERS) has been a big topic up here this week in the Legislature. We debated an amendment to the IPERS bill dealing with funding of the retirement system, through worker and employer contributions. Currently IPERS is in a state of concern. For two reasons: a few slim years on investments in the stock market and people are living longer. We must make changes if we want retirees to receive the benefits they have invested in.
IPERS is a state sponsored retirement system of guaranteed benefits for public employees: state, cities, counties, townships, agencies and school districts are all eligible for these benefits. Many funds on the stock market have seen a decline and IPERS is one of them. Currently there is a shortfall in the fund, as there is a shortfall in many personal retirement accounts invested on Wall Street. History shows us returns on investments go up and down, and it is not anyone’s fault that the economy is currently not doing as well as it once did.
Since IPERS beginning members pay 40% and the employer pays 60% of the invested retirement funds. It is a tremendously generous fund the employee and taxpayers contribute into for personal retirement. But with the growing age of retirees, to keep the fund solvent changes need to be made.
A change to the IPERS system is a difficult decision to make, 160,000 public employees in Iowa are affected. Right now the fund is 88.6% funded, but ten years ago the fund was at 98%. To stay solvent, or fully invested, it needs a return on investment of 7.5% which is a high return rate to achieve every year. To get the retirement system 100% the legislature would need to appropriate $243 million to the fund. I am concerned the fund remains solvent because so many Iowans are depending on IPERS as their full retirement plan. But is it right to ask the employer (all Iowa taxpayers) to pay more because our return on investment is not as good as it used to be?
The proposed change in the contributions would go from a percentage break of 40/60, with the 40 percent being funded by the employee to an even split of 50/50 percent with employee and employer investing the same portion. Unfortunately, the amendment failed and there have been no changes to the IPERS system.
If your retirement fund is weakening due to a slide in the stock market, do you come to the government and ask them to make up the difference?
IPERS is the public employee’s retirement fund, not all Iowa residents are able to contribute or draw from this fund. I think that we, all state employees, should be willing to shoulder more of the responsibility of keeping the fund solvent even if it means paying a little more into it. I feel we should have a 50/50 split, employee invests $50 and the employer invests $50.
In this plan there are absolutely no benefit reductions in the proposed bill for current employees. Not a single employee will have to work a day longer because of this bill. No changes are made to retirement dates for current employees. The bill will only protect the integrity of the IPERS fund. However, if no changes are made to contribution rates, the unfunded liability will grow and in time the benefits will be at risk.
Thank you for taking the time this week to learn more about IPERS. This is an extremely important issue that affects many Iowans, so legislators will continue to work with the IPERS people to find an acceptable solution to the IPERS program whose benefits are at risk.
Anytime you are here, please stop by my office and say hello. Visit my website at www.stewiverson.com to check out pictures of our guests, along with press releases and an archive of my weekly column.
Please contact me if you have any comments on this or any other issue. During the legislative session, you can contact me in my Des Moines office at 515-281-3560. As always, you can reach me in Dows on the weekends at 515-852-3350 or contact me via email at stewart.iverson@legis.state.ia.us .
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