|
|
|
|
||
|
||
|
|
||
| SEARCH | SUBSCRIBE | ||
|
 |
State
retirement plan facing financial troubles Associated
Press via Billings Gazette September
23, 2003 The
program that provides pensions to thousands of retired public employees is
in financial trouble and will need to be bailed out by state and local
governments, a new report says. The
Legislative Fiscal Division report concludes that an increase of at least
29 percent in employer contributions to the Public Employees Retirement
System may be needed to make its trust fund financially sound again. Greg
DeWitt, author of the report, said no decision will be made on the size of
any increase until a financial analysis is completed a year from now.
However, he said, the Legislature should be aware of the potential
increase in state costs. The
retirement program's problems are rooted in investment losses caused by
the downturn in the stock market over the past few years. DeWitt said the
program, known as PERS, lost $350 million in the two-year period from July
2000 to July 2002. Although
investment earnings rebounded last year, the improvement likely will fall
short of the 8 percent growth expected in the last PERS financial
analysis, he said. Because
making up those losses doesn't involve increased benefits for retirees,
the money will have to be collected from employers -- state agencies, city
and county governments, and school districts. Currently,
the employers' contribution to PERS is 6.9 percent of payroll. DeWitt
said a preliminary estimate suggests that rate may have to climb to 8.9
percent. For
the state, that would mean an $11 million annual increase to nearly $49
million. The
increase could come over time, rather than all at once, to soften the
immediate effect on government budgets, he said. Mike
O'Connor, PERS executive director, said Monday that Montana's program is
not alone. Market conditions have left all public retirement funds in
similar situations, he said. The
extent of the problem facing Montana's state retirement program will
depend on what happens with the stock market in the next year, before the
system's board meets to decide on the new employer contribution rate,
O'Connor said. Montana's PERS fund holds $2.7 billion in assets, which are
invested by the state Board of Investments. The
system has 30,000 active members and 16,000 retirees.
Copyright
© 2002 Global Action on Aging |
