Updated KPERS Pension Data Available At KansasOpenGov.org
Lucrative Payouts Underscore Need For Reform
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March 1, 2012 - Wichita - While much of the debate thus far in the 2012 legislative session has centered around whether to modify the government employees' retirement plans to address billions of dollars in pension debt, recently released data shows that 2011 pension payouts set a number of new records. A retiree from USD 233 Olathe is collecting a record-high annual pension of $170,551 for life, or roughly $3.4 million over the first 20 years. Retirees can elect to receive reduced annual pensions and collect a large one-time payment upon retirement. A new record one-time payment was also set by a retiree from the City of Shawnee, who collected $681,981. Individual payments are posted online at KansasOpenGov.org; all data was obtained from Kansas Public Employees Retirement System (KPERS) via Open Records requests.
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All numbers above represent 2011 disbursements from the three biggest government pension plans and identify the entity from which the beneficiary retired.
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"These retirees were certainly dedicated public servants, but the benefits they're receiving far outpace what the average private sector employee could hope to earn in retirement," said Kansas Policy Institute President Dave Trabert; KPI maintains KansasOpenGov.org. "A KPERS retiree with 35 years of service is eligible to collect a lifetime pension equal to 61% of their final average earnings, which can actually be more than their base pay the way the rules are written. With special income tax exemptions for KPERS retirees and Social Security, it's possible for retirees to have greater take-home pay in retirement than while working."
Government pension benefits are largely exempt from state income taxes; retirees pay tax on their personal contributions to the plan, but employer contributions and earnings on all contributions are never subject to state income tax. A 2011 KPI analysis estimated the annual value of that special tax treatment for government employees at $52 million.
The official KPERS unfunded liability is $8.3 billion but the real deficit is more likely to be at least $14 billion; some independent analysts believe the deficit could exceed $20 billion. The variation in the pension deficit estimate is dependent upon the assumed investment return for pension plan assets; KPERS' $8.3 billion deficit estimate is based on the assets earning an 8% annual return over the next 30 years. Most private sector analysts believe the investment return should be set much lower. Last year, KPERS estimated that funding the plan based on a 6% investment return would require an additional $3.3 billion in state contributions over the next 10 years.
Trabert continued, "Legislators are under extreme political pressure from government unions and other interested parties to leave benefits intact, but taxpayers simply cannot afford the price, whether in the form of higher taxes or unnecessarily reducing funding for other services to pay for these lucrative benefits.
" The KPERS Study Commission recommended putting new employees and non-vested current employees into a 401(k)-type plan, and that's the least we should do. Government retirees deserve a decent retirement but not multiple times better than private sector taxpayers. Unless further reforms are enacted to reduce future benefits not yet earned, taxpayers can look forward to higher taxes or other spending reductions," concluded Trabert.
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Kansas Policy Institute is an independent think-tank that advocates for free market solutions and the protection of personal freedom for all Kansans. Our work centers on state and local economic policy with primary emphasis on education, fiscal policy and health care. We empower citizens, legislators and other government officials with objective research and creative ideas to promote a low-tax, pro-growth environment that preserves the ability of governments to provide high quality services. To speak with Kansas Policy Institute, please contact James Franko at (316) 634-0218.
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