The Board was told the contribution rate for regular employees will have to increase by 2.25 percentage points to 23.75% in the coming two years, and the contribution rate for police and fire fighters will need to increase by 2.75 percentage points to 39.75%, according to the Nevada News Bureau. The 2011 Legislature will be asked to fund the state’s increased retirement costs.
The PERS board was also told that the long-term unfunded liability of the state public pension plan grew in the fiscal year that ended June 30, to $10 billion from $9.1 billion as of June 30, 2009. The plan was 70.5% funded on June 30, 2010, down from 72.5% in the previous year.
The news report said the contribution increases will be shared by employees and employers. Regular state employees who pay half of the total contribution will see 11.875% of their salary go to their retirement starting July 1, 2011, up from the 10.75% now – resulting in a slight salary reduction for state workers at a time when cost-of-living increases have been eliminated and unpaid furloughs implemented because of the state’s dire budget situation.
Dana Bilyeu, executive officer of PERS, said the actual cost of the increase to the state and state employees will be $8.7 million each in fiscal year 2012 and 2013 based on estimates by her agency.
Nevada Governor-elect Brian Sandoval said the PERS system needs to change from a defined benefit plan to a defined contribution plan for future hires. A report on a shift to a DC plan will be presented to the PERS board in December.In 2009, lawmakers made some changes to control costs, including raising the retirement age for new employees to 62 from 60 (see Nevada PERS Reform Will not Include Age Hike for Pension Withdrawals).