August 30th, 2021
Charlotte Observer | Group: Redo state pensions
A taxpayer advocacy group on Wednesday called for North Carolina leaders to reform the state’s pension system for government employees, including paying workers a fair wage so they can save more for retirement.
Taxpayers United of America said government pensions across the country lead to some retirees standing to earn millions “to do absolutely nothing.” Meanwhile, a leader with the group said, the state is still dealing with a slow economic recovery and has a 9.3 percent unemployment rate.
“This is a formula for disaster,” said Rae Ann McNeilly, director of outreach for the Illinois-based organization, who said the call for reform was not about ideology but math.
Taxpayers United said local governments and states must honor the retirement plans already in place for current retirees.
But for future workers, the organization is pushing for governments to get rid of the so-called “defined benefit pensions” where retirement pay is calculated based in part by a worker’s earnings history, length of service and retirement age.
Instead, it said retirement pay for future workers should be based on worker and employer contributions to 401(k) or similar programs. In addition, it’d like for current government workers to contribute more toward their pensions.
A spokeswoman for the N.C. Treasurer’s Office, which administers pensions for state and local governments, said the advocacy group’s allegations don’t apply to the state.
Julia Vail said the North Carolina systems were praised in a recent study by the Boston College Center for Retirement Research. She also said that data showed that retirees in the Local Governmental Employees’ Retirement System, which covers city and county employees, received an annual payout of $17,344 per year.
Government workers in North Carolina pay 6 percent of their pay toward their retirement plans, which Vail said is matched by a 6.74 percent contribution by their employer. Some areas like Mecklenburg also offer 401(k) or 457(b) programs to allow workers to put more away for the future.
The Local Government Retirement System is nearly fully funded (99.6 percent), officials say. Vail said neither Charlotte nor Mecklenburg has any unfunded liabilities.
Taxpayers United has made similar calls for reform in 17 other states across the country, and also made stops this week in Raleigh and Greensboro. Generally, the reports on local pensions have led taxpayers and some lawmakers to start discussing potential reforms, McNeilly said.