Archive for Friday, December 28, 2012

Retired public employees seeking cost of living adjustment

December 28, 2012

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— Kansas public employee retirees say they are long past due a cost of living increase on their pensions.

The last cost of living adjustment, or COLA, approved by the Legislature for members of the Kansas Public Employees Retirement System was in 1998.

"Since that time, according to the Consumer Price Index, the cost of living has increase by nearly 40 percent," said Dennis Phillips, who is chairman of the Kansas Coalition of Public Retirees.

"While we are sensitive to the budget problems of the state of Kansas, we believe that it is way past time for a COLA," Phillips said as the coalition released a report Thursday to the Legislature.

There are approximately 77,000 retired KPERS members. The coalition includes 39 groups including retirees formerly employed by state and local government and schools.

When the Legislature convenes its 2013 session on Jan. 14, lawmakers will face a projected $295 million budget shortfall for the next fiscal year.

Aside from the COLA issue, public retirees will be confronted by a move by the powerful Kansas Chamber of Commerce, which has said it will lobby the Legislature to move away from a traditional pension system and start a 401(k)-style plan for new teachers and government workers. Gov. Sam Brownback has voiced support for such a proposal.

Over the past two sessions, the Legislature has approved measures to deal with KPERS funding problems, but a proposal to move toward a 401(k)-style plan, where benefits are tied to investment earnings, failed earlier this year in the Senate on a 20-20 vote. Many of those moderate Republicans who voted against it have been replaced by candidates supported by the Kansas Chamber.

Public employee groups, including the Kansas Coalition of Public Retirees, oppose setting up a 401(k)-style pension plan, saying it will result in reduced benefits, and will fail to help reduce the unfunded liability within the KPERS system.

Comments

Bob Forer 2 years, 4 months ago

Which is too bad. 14 years and no COLA? Too long, in my opinion.

Grump 2 years, 4 months ago

Agree it's way too long. But this Legislature would cut their benefits if it could.

jafs 2 years, 4 months ago

As far as I know, COLA aren't promised to KPERS recipients.

Unlike SS, which includes them tied to inflation (a certain measurement of it).

MISTERTibbs 2 years, 4 months ago

So. How many of the 77,000 retired KPERS members are double-dipping and earning full wages while pulling in a full pension as well? Or better yet, pulling pensions from multiple public jurisdictions?

For those that are truly retired and trying to survive off of the plan the way it was originally intended, I thank you for your public service and agree that a COLA is way past due. As a former public servant myself , I have no sympathy though for those that played the system.

chootspa 2 years, 4 months ago

Why would this be a problem if they abide by the rules set forth by the plan? I know people who earn military pensions at the same time they work in a civilian job after retiring from the military. I don't have a problem with that one, either. Heck, you could retire from the military, start a second career as a teacher, retire early with full benefits, and go off to a civilian job with a matching 401k. It's not cheating if the contract allows it. Sounds like a smart plan to me. Wish I'd had the wisdom to do that.

I don't think KPERS pays health benefits, does it? So if they retire at 55 or whatever, how else are they suppose to cover medical expenses before Medicare kicks in? Not to mention the whole COLA thing. I had no idea. No adjustment since 1998? Wow. I hope they had additional savings, because that just sounds crazy.

just_another_bozo_on_this_bus 2 years, 4 months ago

"Sounds like a smart plan to me."

Na. If they were really smart, they'd have gone to work on Wall Street, where they don't have to do any actual work, but get paid many orders of magnitude more, and can trash the entire world economy without any repercussions whatsoever.

chootspa 2 years, 4 months ago

That's true. If they were really smart they'd leverage the buyout of some company and sell it off for parts while screwing those workers out of their private sector pensions. That's the sort of noble acts we like to see in our "job creators," and if we cut taxes enough, maybe we can get in on that sweet action.

jafs 2 years, 4 months ago

KPERS doesn't promise COLA, to my knowledge.

It's a generous plan nevertheless, so recipients should be able to plan for inflation without them (SS includes periodic inflation indexed COLA).

Kendall Simmons 2 years, 4 months ago

Generous??? Where on earth do you get the idea that KPERS is a "generous" plan?

chootspa 2 years, 4 months ago

It is more generous than the crappy 401k they want to use to replace it with, even if it isn't indexed to inflation.

jafs 2 years, 4 months ago

From my wife's KPERS information.

It's a defined benefit plan, and it's much more generous than SS.

If you look at the amounts paid in vs. the amounts gained in benefits, it's about a 10/1 ratio of benefits to contributions - sounds pretty generous to me. Example - a $50K salaried employee will pay 4% (or maybe now 6%), which translates to $200-$300/month. Benefits will be close to $2000/month at retirement. Even using the higher contribution, you get about 7x as much in benefits as you pay in to the system.

Where on earth do you get the idea that it's not??!!

jafs 2 years, 4 months ago

Another facet is that benefits are paid based on FAS (final average salary), but that's actually calculated as an average of the 3-4 highest salaries, not necessarily final ones.

So, using my example, one could make about $25K for 20 years, $35K for 5, and $50K for 5, pay significantly less in, and receive benefits based on the $50K amount.

That means if you work for 30 years, retire and live for 20 more (God willing!), you'll get about 6x as much in benefits as you paid in.

Now, if you had the money and invested it yourself over those years, it's possible that you could do better, but you'd be assuming the risks as well, which is why defined benefit plans are attractive to risk averse folks.

BlackVelvet 2 years, 4 months ago

I worked as a public servant for over 30 years, and retired at 50% of my normal pay (which wasn't anything to brag about). No cola means I have less and less money to pay bills with. And finding any job is a challenge. The State is happy to be rid of employees once they retire. Why should they lift a finger to care about us now?

Bob Forer 2 years, 4 months ago

The idea that there are thousands of former Kansas government workers "doubling dipping" is a fallacy. Most government employees cannot afford to retire until age 65, because they require both their social secutity and KPERS benefits to make ends meet. Also, most folks are not eligible to receive KPERS benefits until they reach age 65, or are very close to reaching age 65/. There is formula (which I can't recall) that allows one to receive benefits before age 65 when their age plus years of setvice exceeds a certain number. But that number is prohibitively high and I understand that unless you have been with the state for thirty or more years, you cannot receive benefits until you reach age 65.

BTW, wages for most state government employees are much lower than the private sector.

The image of a state government employee bilking the system just don't focus. Remember, this is Kansas.

Kendall Simmons 2 years, 4 months ago

What do you mean..."played the system,"??? Retired and began collecting your pension, then got offered another job? Why is that a bad thing? Why should KPERS members not be allowed to do that, when private sector workers are?

Tracy Rogers 2 years, 4 months ago

What difference does it make if they're still working and also collecting their pension? They earned the pension, they should get it. What they do from the time they retire on is up to them and their employer.

Liberty275 2 years, 4 months ago

We are/were their employer. The answer should be no.

Kendall Simmons 2 years, 4 months ago

Exactly what question were you saying "no" to? "You can't work for anyone else every again once you start collecting your KPERS pension"???

Liberty275 2 years, 4 months ago

No raise. They can work as long as they want as far as I'm concerned.

Jefferson_County 2 years, 4 months ago

Or, the government might establish a retirement plan for its employees and then not fully fund it. Hardly an overreach, unless you are talking about the legislature's reach into the fund to spend it on other things.

Dave Trabert 2 years, 4 months ago

The legislature has not fully funded KPERS for many years but that has not impacted the benefits of any retirees. No legislature has or can "reach into the fund to spend it on other things." KPERS assets are separately held and not accessible to anyone...by law.

just_another_bozo_on_this_bus 2 years, 4 months ago

Oh, Dave, don't be so modest-- I'm sure that you and AFP have plans in the works to rip off every pension plan in existence. After all, the Koch Bros. have profits to be made, and you're just the guy to kick pensioners to the curb to deliver them.

jafs 2 years, 4 months ago

If they haven't funded it, and used that money for other things, it amounts to the same thing.

Dave Trabert 2 years, 4 months ago

KPERS retirees may not receive annual cost of living increases in their pensions, but then neither do most private sector retirees who foot the most of the bill for public pensions.

On the other hand, KPERS retirees receive far greater retirement benefits than private sector taxpayers. The payouts are much more generous; an employee with 35 years' service receives 61% of their Final Average Salary in a pension for life that is free from state income tax (the retiree pays tax on the money they personally contribute to the plan but not on the bulk of their benefits. And of course, KPERS retirees also receive Social Security.

So, someone who retired at age 65 with 35 years' service and FAS of $50,000 receives a pension for life of $30,625 and Social Security benefits of about $15,380...but since there is no state income tax on state pensions, that person would actually have more take home pay in retirement than while working.

The highest annual pension distribution in 2011 was $170,551 to someone who retired from USD 233 Olathe. Some retirees elect a large one-time distribution and then receive smaller annual pensions; the largest one-time distribution in 2011 was $681,981 to someone who retired from the City of Shawnee (police and fire). A complete listing of individual pension payments is at http://www.kansasopengov.org/Retirees/RetireeDatabase/tabid/1569/Default.aspx

Katara 2 years, 4 months ago

Military retirees also get pensions that are tax free from state income tax in KS. Are you going to suggest that because of that, they also are not deserving of a COLA? There also other groups who get state tax free retirement income. Are you going to suggest that because they don't pay state income taxes, they don't deserve COLAs?

You are arguing that not being required to pay state income tax is a very generous benefit and that those folks don't deserve any more because of their tax free status. I don't see you and you Koch funded toadies making that same argument about the 191,000 businesses who will be completely free of state income tax. You will continue to still lobby for more and more - certainly much more than an overdue COLA - for businesses in KS without those businesses guaranteeing anything in return to benefit of the citizens of this state.

So how much do shills for the Kochs get for retirement? I should think you should get a nice fat pension for selling your soul. It is the least that they can do for you.

Dave Trabert 2 years, 4 months ago

Kansas Policy Institute is a small organization and like many other small employers in the private sector, we cannot afford to offer our employees any retirement benefits.

Grump 2 years, 4 months ago

Any meaningful wages above minimum, vacation time, sick leave and health insurance? (And I don't mean just for you.)

Katara 2 years, 4 months ago

Oh, I get it now. You don't get benefits so no one else should either. Typical.

So, to get this straight... state tax free status for retirees = overly generous benefit and they deserve nothing else further. State tax free status for businesses = just the tip of the iceberg and since they are the "job creators" deserve way more.

chootspa 2 years, 4 months ago

So why not work to make sure everyone gets a great retirement benefit instead of taking it away from people who make wiser choices than working for delusional Koch-funded think tanks?

chootspa 2 years, 4 months ago

We used to get nice things in the private sector. It was greedy people like your puppet masters that ruined that for all of us. Raiding corporate pensions to pay upper management, dissolving the funds in acquisitions and leveraged buyout deals, and tricking the middle class into accepting lousy 401k plans as a substitue for a real retirement.

I refuse to look at a middle class worker getting a promised retirement benefit as somehow unfair because private sector workers are getting screwed. I refuse to get shocked by the outlier when managers in the corporate sector with that level of experience would be getting many times that in compensation and retirement benefits.

Plus, as you consistently fail to state, there IS state tax on KPERS. It's been pre-paid, just like a Roth IRA. They still owe federal tax on it, though. I'm thinking the one time distribution is probably the better deal if there's no COLA increases. Good on whoever it was that got that nice benefit for his service protecting even the lousy former managers of failing TV stations.

Kanboy 2 years, 4 months ago

I have worked for the State of Kansas for over 32 years. I now earn $43,000.00 per year. Not one person in my unit at DCF makes $50,000.00 a year. My supervisor does not make $50,000.00 per year. We all have college degrees and could have earned more money in the private sector. We chose public service. I don't think any of us are going to get rich from our kpers retirement.

Kpers1 2 years, 4 months ago

While you are correct that Kansas State employees recieve a pension that is for life, the rest of your discussion is very misleading. Kansas State empolyees pensions are calculated at 1.5% per year of active service. Kpers deductions are not taken out the first year they are employed and when a State employee buys it back, if they do, the cost to them is based on the cost at the time that they decide to buy it back. This is always, more than it would have cost for that first year if it were deducted from their pay check at the time that they were hired.

Second, how many people do you currently know who have stayed with the same employer for 35 years. I'll bet not many. You make it sound like State emplyees are ripping the public off what has lawfully been promised to them as if it were their own doing. Not true and never was. Kansas State emplyees provide a valuable service to the public, usually directed by the sometimes stupid rules, regulations and laws put into effect by the legislature and the governor. In addition, what about the employee who retired, say ten or even fifteen years ago. As you state, the pension is calculated on the "final average salary". Do you really think most state emplyees made $50,000.00 per year ten or more years ago and that they all live forever?

I would agree, the system needs to be fixed, but don't try to make it sound like retired state employees have a financial windfall and turn the public on the very people who attempt to carry out a very necessay function of our lives as Kansans . They are just living by the rules created by the the Kansas state government leaders who people like you and everyone else elects.

Kendall Simmons 2 years, 4 months ago

I sure wish that "think tanks" would tell us what they're basing their "examples" on.

I mean, it's sooo easy to talk about an FAS of $50,000 and win sympathy for your side of an argument when you can ignore the fact that most KPERS retirees never made $50,000 in their lives.

And then to list the HIGHEST pensions? And one-time distributions? Good grief.

That $50,000 FAS is an incredibly and deliberately skewed figure apparently designed to reduce support for COLAs. How about giving us an example of the typical KPERS retiree?

Charles L Bloss Jr 2 years, 4 months ago

I retired in 1997, I do not remember ever receiving a COLA from KPERS.

Silverhair 2 years, 4 months ago

If you are a young person working for the state, get away from state employment as fast as you can. There is no future in it. There are not wage increases and you will retire in poverty.It will be even worse once switched over to a 401k plan. They won't fund it.

chootspa 2 years, 4 months ago

If they switch to a 401k plan, basically it will be a forced savings plan that will be tied to the stock market. They probably won't divert the funds, so there is that, but it will still be a bum deal. Mediocre if the economy is booming, a disaster when it isn't. The same boom and bust cycle that we worked so hard to avoid until the Kochs and other libertarians came and brought it back again. Thanks a lot, guys.

PS - retirement and pension funds are some of the biggest investors in the hedge funds and leveraged buyout vulture capitalists that are ruining the economy long term. It's all a huge mess.

There aren't any fantastic solutions with the pension system, but there a lot better solutions than this.

James Nelson 2 years, 4 months ago

The so-called fiscal conservative republicans who have controlled Kansas state government for several generations have perpetrated an unusually horrible hoax upon the people of Kansas and especially Kansas government workers. After all, wouldn't a fiscal conservative make sure all accounts are square before knowingly dropping sizable pieces of income? Wouldn't a fiscal conservative make sure the cupboards were full before turning the pigs loose?

The so-called fiscal conservative republicans who served on the KPERS committees the last 30 years should be arrested for fraud and extreme bad faith for ignoring the annual warnings from actuaries about the growth of KPERS shortages. These shortages grew to equal the amount it would take to operate the entire Kansas state budget for two years. Folks, this is not chicken feed. How big does the two by four have to be to whack them up side their heads to get their attention? What happens when the 'fiscal conservatives' ignore the state's real fiscal needs like KPERS and crumbling buildings on university campuses when the money is there but unwisely choose to give it back to their friends instead like they did during the Graves years and again in 2012? We see a governor and a legislature willing to risk financial armegeddon for Kansas instead of shoring up the states huge liabilities by slashing the state's own throat (revenues) with unprecedented tax cuts.

KPERS big whigs should be thoroughly ashamed of themselves for not screaming to the public of the irresponsibility of the legislature and/or governor. You say they might lose their jobs? Who wants to work for crooks, anyway?

The last Kansas government official to take affirmative action to the KPERS shortages was none other than Kathleen Sebelius who pumped in $500,000,000, this back before the great recession when the shortages were not even as severe. Now thats how a real fiscal conservative operates.

Richard Heckler 2 years, 4 months ago

Reckless Rt Wing Libertarian Neocon Fundamentalist Tea Party for Economic Terrorism continue to wreck havoc on USA and Kansas workers. After 33 years experience I'd say they are addicted to fraudulent mismanagement of other people's money....... OUR MONEY.

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