According to the Milwaukee Journal-Sentinel, the report shows that state public employees on average receive hundreds of dollars more per month in retirement than higher-paid employees in the private sector. An employee covered by the Wisconsin Retirement System who earns $48,000 a year would retire with an estimated monthly benefit of $1,712 from the system, while a private sector employee who earned $70,000 a year would get an estimated $1,301 a month in retirement – or $411 less per month than the lower-paid public sector retiree, said Joan Gucciardi, a Milwaukee-area actuary with more than 40 years of experience who spent nine months preparing the report.
Other factors the report found that enable public employees in Wisconsin to do better in retirement: Most can retire at age 57 with full benefits, as long as they’ve got 30 years of service, and when they retire, the employees get to choose between the better of two benefit calculations that use either years of service (plus other factors) or the market value of the contributions made for them.
George Lightbourn, the president of the conservative think tank said statistics showing that even as the state has lost 140,000 jobs and one-eighth of its manufacturing workforce during the recession, public employees’ benefits have been protected prompted the institute to commission the report. “The economy is affecting private sector employers, and they’ve had to – not by choice but necessity – alter what they offer employees,” Lightbourn said, according to the news report. “Government has never done that examination, and that’s why we did the study.”
Report author Gucciardi said she was surprised to learn that most public school teachers and others covered by the state retirement system don’t pay what’s called the employee contribution – about half of the 11.2% or more of their salary that’s deposited into their pension fund accounts each year. If public workers paid the employee portion of their pension contribution, the state would save $600 million a year, the report says.
In negotiations with public-employee unions, state and local governments often agree to pay the employee portion of the pension contributions rather than pay higher salaries, said David Stella, secretary of the Department of Employee Trust Funds, which administers the state retirement plan.
The report, “The Imbalance Between Public and Private Pensions in Wisconsin,” is here.