Increasing the taxpayer's burden for unfunded state pension liability

Published July 26, 2014

by Brian Balfour, Civitas Institute, July 21, 2014.

According to the most recent report available, North Carolina’s main pension fund for retired state employees is strapped with a $3.7 billion unfunded liability. This growing liability means taxpayers must pony up an increasing amount of funds to cover the costs of promised benefits to retirees. In FY 2013, taxpayers were paying $1.1 billion to cover state retiree pension benefits.

And this week’s Bad Bill of the Week would make that problem even worse.

House Bill 1192, Return to Five Year Vesting, is sponsored by Reps. Jeff Collins (R-Nash) and Stephen Ross (R-Alamance) and also has the support of State Treasurer Janet Cowell. The bill would shorten the number of years required for state employees to become eligible for pension benefits, thus increasing the liability of taxpayers to support these retirees.

North Carolina’s state pension plan is a “defined-benefit” plan – meaning that retirees are promised a set amount of benefits upon retirement. In the case of the state’s main pension plan, Teachers’ and State Employees’ Retirement System (TSERS), that benefit comes in the form of a monthly payment for the rest of their lives.

The payment due to retirees is calculated using a formula involving the retiree’s average pay and length of service.

Under current law, state employees become vested in their pension benefits (i.e. eligible for the monthly checks) after five years of service; they receive full benefits at age 65 or partial benefits at age 60.

A notable exception to this rule, however, is for employees hired on or after August 1, 2011. They must attain 10 years of service before becoming eligible for pension payments. This change was made in 2011 in recognition of the state pension fund’s worsening unfunded liability.

HB 1192, however, would eliminate this exception and once again make all employees eligible for pension benefits after only five years of service.

North Carolina taxpayers are already paying more than a billion dollars a year for state retirees not to work. Piling the state pension’s unfunded liability higher will place an even greater burden on taxpayers. Because it reverses even a minimum measure to rein in North Carolina’s growing unfunded pension crisis, HB 1192 is this week’s Bad Bill of the Week.

http://www.nccivitas.org/2014/increasing-taxpayers-burden-unfunded-state-pension-liability/

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July 26, 2014 at 10:08 am
Norm Kelly says:

Did we need more proof that too many politicians believe that taxpayer wallets have 2 interesting characteristics? First odd characteristic of taxpayer wallets: they actually do NOT belong to the taxpayer, they belong to the state, to use as the state wishes. Second odd characteristic of taxpayer wallets: they are bottomless; politicians can take as much out of them as they want and the wallet will never be empty.

This is why the TEA people exist. Governments at EVERY level doing stup1d things with OUR money. Telling us on a regular basis that the money WE earn does NOT belong to us. We are left with the money that POLITICIANS think we can survive on.

To too many politicians believe an 'unfunded mandate' is nothing more than future money that will be found somehow, from somewhere, but not anything that current politicians need to worry about. It's happened in Washington over the years to the tune of MORE THAN $17TRILLION! It happened recently in Raleigh when demon pols 'borrowed' 10% of the total budget from the already-broke central planners to pay people NOT to work. Of course, since they are good libs, not only did they borrow money putting the state into debt, but they had NO PLAN to repay the loan. Add to this that they wanted to DO IT AGAIN, begged for permission to do it again! Now we find out that taxpayers are funding retirement benefits for state employees instead of state employees funding their own retirement. Why do PRIVATE business employees fund their own pensions when PUBLIC/GOVERNMENT employees get their retirement paid for by taxpayers? Instead of pols deciding that I CAN AFFORD to pay for someone else's retirement by reducing the time it takes to become vested, why aren't these pols making 2 other EASY changes to the plan. First change, you want money in retirement, you pay for it! Second change, set & KEEP a set number of years for vesting. The number of years should be fair to both the employee and the retirement plan. Something like either 7 or 10 years sounds fair. If you don't make a commitment to your job for at least that long, do you deserve any income at retirement?

These are EASY changes, not simple changes. Just like most things that pols take on, easy but not simple. Correct, and right, but not popular. At least, not popular with the people affected by the policies.

There are choices here. Make a change that will be unpopular with a limited number of citizens, government employees. Or make a change that will be unpopular with a majority of citizens, taxpayers who are NOT government employees. Which group is larger? Which group has more voters? See, easy. But it's also RIGHT! My back pocket DOES NOT belong to you! My back pocket IS NOT UNLIMITED! I'm trying to save enough money for my OWN RETIREMENT! The more money governments feel comfortable stealing from me, the less I can afford to fund my own current living as well as my future retirement.

The central planners pass unfunded mandates to the state. The state-level central planners pass unfunded mandates to the taxpayers. Eventually taxpayers will revolt. It's already happening. We are called by 2 names: TEA people and Libertarians. Of course, the ever senile Harry calls us fascists, and unpatriotic. But it's the socialists in government that are unpatriotic. Imagine over $17TRILLION in debt and the central planners are still NOT satisfied with that level of debt. They see no end to the ever increasing debt at ANY point in the future. They are perfectly comfortable with the notion of costing us all more and more and more. And that stup1d attitude has expanded beyond Washington and has permeated too many state legislatures. There was hope that removing so many libs from Raleigh would change this death spiral. We now see that we didn't elect enough conservatives this time around. It was a good beginning, but it's proof that our work has only just begun. When the buffet slayer's head explodes from the budget changes implemented by conservatives, we'll know we have gotten close to our goal. But our state has a long way to go to achieve a common sense budget plan. When people like the rev buffet slayer object, when Gary posts editorials complaining about conservative budgets, we know we are on the right path. We have more work to do. We want to force both Gary and the rev to have heart palpitations from the changes! We want to force Gary to post even more harsh editorials complaining about people being responsible for themselves, taking care of themselves, paying for their own living expenses, with a reasonable safety net in place. When the ranting from the left gets loud enough, contentions enough, crazy enough, we'll know the goal is in sight. I'll continue to do my part. Do we have enough other people willing to admit they are Libertarians? I can only hope. And pray.