Mississippi’s retirement plan is not unique in that it faces challenges, such as market downturns, a global pandemic, and changes in accounting standards. These events are impacting pension plans nationwide.
Where Mississippi PERS differs, however, is structural enhancements to the system enacted by lawmakers in the late 1990s and early 2000s. In short, the Legislature voted to increase retirement benefits – without paying for these costs. They simply extended the pension plan’s payback period, a practice the legislative watchdog committee (PEER) warned against. A 1998 PEER report pulled no punches, suggesting legislative action was “almost analogous to buying benefits on credit. As anyone knows, too much credit can be a dangerous thing.”
Even the Mississippi Constitution (Sect. 272A) speaks to this issue, prohibiting legislation from being enacted to increase benefits “in any manner unless funds are available.”
The unfunded enhancements along with other challenges have resulted in something of a “perfect storm” for the system – and taxpayers are being asked to shoulder the burden with no end in sight.
When the system was established, the employee (beneficiary) contribution rate was set at 4.0 percent, while the employer (taxpayer) rate was 2.5 percent, for a collective contribution percentage rate of 6.5.
Since that time, the ratio of taxpayer-supported contributions to beneficiary-supported contributions has significantly changed, with an increased reliance on Mississippi taxpayer dollars. At PERS’ beginning, taxpayers were expected to provide 38.5 percent of pension costs; today, that figure has risen to about 66 percent. But costs are rising for both taxpayers and members. Since its inception, PERS members have seen their rates rise by 125 percent, from 4.0 percent to 9.0 percent. Taxpayers, on the other hand, have seen their rates increase from 2.5 percent to 17.4 percent, an astounding increase of 596 percent.
Members have not seen their contribution rates increase since 2011, when the Legislature changed their required rates from 7.25 to 9.0 percent. However, during this same period, the PERS Board voted to increase taxpayer funding by 45 percent.
The PERS chart below visually demonstrates this increased reliance on taxpayer contributions.
As lawmakers evaluate the state retirement plan, it is important to understand historical context, the origins of PERS, and its current benefit structure. The lawmakers who developed the system anticipated that members – those who benefit from the plan – would cover most plan liabilities, not taxpayers. However, in recent years, that paradigm has shifted, with taxpayers being asked to contribute more and more funds to the fraught system.
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31 comments:
And it's not been uncommon for state employees (can't speak for others covered by this system) to not see a pay raise for five or six years at a time.
Thirty five-forty years ago pay grades with ten steps were dreamed up for groupings of jobs...that was never funded either.
Then blend in the 'high five' fiasco with agency administrators promoting favorites so they can increase their retirement.
Then let's not forget the Supplemental Legislative Retirement Program (commonly known as SLURP), which gave legislators a nice, extra bump in figuring their total retirement after holding a part time job. And many of us heard comments such as, "Really, I must not have read it. I didn't realize it did that." And those were the comments of legislators.
So, in this whole bag of mushy, sprouted-taters, there's enough stupid go around.
But, as with 95% of Salter's articles, 'Tell us something we don't already know, Captain Obvious!'
(Standing by for the 'haircut guy'. He's sliding off his dunce stool as we speak.)
I realize Bigger Pie is comprised of folks who are true wizards, soothsayers and other types of know- it-alls...but, how do its article writers know what "lawmakers who developed the system anticipated"? Most of those lawmakers are long dead or long retired or both.
Suck it up!!! The vast majority of those “state workers” are extremely under worked and extremely over paid!!!! AND they want you to pay them for their investment shortfalls.
Mississippi has a billion dollar surplus.
It should just shore up the retirement system.
It is owed to the thousands of teachers, law enforcement officer and government employees who
served with low pay.
After all their benefits are spent and go back into the economy.
@ 12:02 I will say that all of the Department I work for except the top five or so admin positions are in fact the opposite - extremely overworked and extremely underpaid. Take a look at the MSPB job postings, you will find 90% of jobs are underpaid, except for the few admin positions making 6 figures.
Do you now how to read a balance sheet?
You do? Good. Go read the unfunded liabilities line on the PERS balance sheet. What's the number?
When the state, county and municipalities have to chip in more for PERS, that reduces money that could have gone to raises. The employer contribution has gone up several times, as has healthcare costs, so wages have been very stagnant.
That's the cost you pay as a participant. That guaranteed income in retirement comes with a cost, and that cost is working for peanuts.
Does bigger pie think that nobody has been reading JJ for the last ten years? Is there anything new in this article?
PERS is unsustainable. It isn't a matter of if PERS goes off the fiscal deep end, only a matter of when. Hosemann crows in his TV spots about reducing the number of government employees and ostensibly shrinking their ranks even further should he be re-elected. Retirees believing they'll come through unscathed from the crisis are only fooling themselves. Retirees will be the big losers in the end for opposing reform and demanding only the status quo.
Telling how we're hearing nothing out of Better-Than-Jim-Hood Presley, nor his campaign mouthpieces over at Barksdale central, about this mess.
Unfunded liabilities is the present value of all future payments to current members and retirees of PERS, as determined by the actuary, minus the value of assets as of a certain date, such as the end of a fiscal year. Unfunded liabilities does not consider any future contributions by employees or employers.
The sky is blue and water is wet. When can we get some original thought out of our think tanks?
Attn 1:24 PM so, basically if I ran a company and promised an unfunded retirement plan, I would go to jail for fraud.
My advice to younger state employees:
Save money for your retirement. Start NOW.
Do not rely on PERS- it will be in an altogether different form when you retire
Refund all contributors, let them contribute to a 401k.
All of this points to a much bigger issue. The fiat monetary system.
With the ballooning of debt and printing of more and more money, the dollar begins to lose money more and more rapidly. You can no longer be a teacher or a firefighter, you have to be an investor as well. Decades of increasing pressure on pension funds to take on more risk in the reach for yield so that promised future benefits can be met. The risk and the yield have to be greater and greater as the dollar is inflated away at alarmingly increasing rate.
We have not found a way to recover from 2008. Demand remains weak and Central banks spent the last 15 years marking time hoping things would get better with cheap credit. 15 years of stock buybacks with cheap debt was not sustainable. Stock prices and other asset prices ultimately depend on real economic growth, not monetary stimulus. With widespread automation and the global mobility of capital and the immense downward pressure on labor (job creation) and wages especially in Rich world countries, demand just is not there.
We are living in the end game of a Monopoly Board. Much of the wealth has been distributed. The renters are established with their Hotels, Houses, and Utilities. The rent is being collected from the rest and concentrates with those who own the Hotels. Occasionally there is technological disruption that creates new wealth and distributes money to all players to prolong the game. Occasionally wars create a disruption.
But the game is set.
You state employees would be fine if the state legislature and senate were on this plan, but no, they have their own fully funded plan they voted for themselves. Think about that the next time you see several of them eating and DRINKING call brand whiskey on some lobbyist’s money.
2:50, give me all of my contributions and the matching contributions and I'll call it even. That money has already been paid out of state and local coffers, so it belongs to the participants. Deal?
This is exactly why those of us that are productive and work and pay taxes are planning our escapes to Tennessee, Texas and Florida. To escape Mississippi’s income tax penalty for being the few doing the right thing.
@3:47 you think your avoiding taxes by moving to those states? They just over tax you via other methods. Governments gonna get theirs...
As always, Kingfish, ever the dunce, weighs in with a nothing-burger aimed at nothing and nobody.
Let's model PERS on the same financial continuum as Social Security and then shoot craps as to which one goes broke first. Belly up to the table!
As always, Kingfish, ever the dunce, weighs in with a nothing-burger aimed at nothing and nobody.
He is also always happy to let you display your ignoramus self.
1:31, when can we get legislators with spines to deal with the PERS train wreck?
As always, Kingfish, ever the dunce, weighs in with a nothing-burger aimed at nothing and nobody.
He is also always happy to let you display your ignoramus self.
June 15, 2023 at 7:43 PM
Thanks for your post at 7:43, Kingfish. Suppose you tell us how it contributes to the discussion for you to jump in and tell us all to read the balance sheet. We've read it fifty times already, which is equal to the number of times you have thrown it up over the past three years. Nobody, including retirees, doubts the system is broken.
8:45 PM, questions like yours are always intriguing.
For the answer go to church this Sunday and find the little old ladies sitting close to the front row. The ones you see with Mississippi Public Employee’s Retirement will throw their morals out the window and vote Democrat the minute you subject them to the same market conditions private retirement accounts (401K’s) are subjected to.
In other words, any politician that screws with PERS is gone. And Democrats are dying for D A Republicans “to deal with the PERS train wreck” so they/Democrats can take over the state and destroy it like they’ve destroyed cities like Jackson.
“No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money,” - Mathew 6:24
I'll bet ever MS Governor/Legislature will kick this can down the road until the U.S. Government defaults on its debt obligations (or the dollar crashes) and then they'll blend the PERS crisis on with that horror show and say, "We never saw it coming. There was not a thing we could do." Pure politics.
Are fine elected officials in Jackson play by one major rule.
Wait until an issue reaches the end of the rope and it looks like
its a hopeless situation then
Ride their chariots to Jackson and temporarily fix the problem.
Then they hold press conferences about how they saved the world.
(Kind of like the A-Team from the 1980s starring Phillip Gunn as
Sergeant Bosco Albert aka B. A. Baracus and Reeves
smoking a cigar talking about how he loves it when a plan comes together)
You call them when nobody else can help
This situation has to reach the point of imminent catastrophic
failure before anything will get done. Then it will be another short term
fix as the leaders know they will be out of office in a few years and someone else
will have to deal with it
Please tell me the last time they were proactive about anything
Now we can add the ever-nauseous voice of Gerard, over at the wealth management studios of Mid Day. He too is today's Captain Obvious alerting us all to 'A serious problem over to the PERS building'.
He simply wants to be heard and covets another position on some ad hoc commission to solve another problem, or, rather to bloviate.
What exactly is a think tank and how are they funded?
Russ Latino operates a think tank. That Englishman runs one and chimes in everywhere. Empower something or other. This blog is one. Bigger Pie is another. Most are funded by suckers who subscribe, advertise or contribute monetarily.
Others are funded by taxpayers. Examples: PEER Committee and State Auditor.
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