State pension fund

The financial sector's freefall has put millions of retirements in jeopardy and delayed millions more. The country's savers are scrambling to maintain what assets they have left, knowing further market losses will mean a commensurate sacrifice in their standard of living.

Unless, of course, you're snuggled safely under the warm blanket of government employment, which serves as a shield from volatility, unpredictablity and the fiscal realities that confront common citizens on a daily basis. On Monday, legislators and taxpayers received more reminders of the economic dangers presented by Nevada's unsustainable, unfair pension system.

During a meeting of the Legislature's Retirement and Benefits Committee, pension fund executives told lawmakers Nevada's Public Employees Retirement System has lost more than $4 billion since July 1. That constitutes a 19 percent loss on the fund's investments, which now total $18 billion, and adds to an existing $6 billion in unfunded liabilities -- promised benefits that cannot be paid without massive infusions of tax revenues and wholesale reforms to the generous rules that determine pension payouts.

Where private sector workers must extend their careers toward age 70 to beef up their savings and receive full Social Security benefits, Nevada government workers need put in only 25 to 30 years of service -- regardless of age -- to retire and receive nearly full pay till the day they die.

PERS Executive Officer Dana Bilyeu told lawmakers that this year's investment losses are cause for concern, but the much larger threat to the system comes from retirees, who increasingly collect pension checks for more years than they actually worked. She said the average Nevada firefighter or police officer retires after 25 years of service at age 55, then cashes pension checks for between 25 or 30 years. Public employees outside public safety retire after 30 years at about age 60, then live into their 80s.

Lawmakers asked whether establishing a minimum retirement age of 65 would make the fund more viable. Then Ms. Bilyeu delivered a double-dose of bad news.

First, state and federal law prevent reductions in benefits to current retirees and workers, meaning taxpayers are on the hook for decades worth of benefits regardless of how the economy performs and whether governments have the revenues to cover them. Then Ms. Bilyeu mentioned that the pension contributions for current employees need to be increased. PERS currently receives an amount equal to 20.5 percent of normal worker salaries and 33.5 percent of public safety salaries each year, but those figures need to increase to 21.5 percent and 37 percent, respectively, to delay the plan's collapse.

With legislators trying to address a billion-dollar revenue shortfall, Ms. Bilyeu's news was not welcome. "We are going to have to revisit the way we contribute," said Senate Minority Leader Bill Raggio, R-Reno. "This cost is driving us crazy."

They might get some guidance from the Nevada Spending and Government Efficiency Commission, which intends to recommend that for future hires the state apply different rules, including a minimum age of 60 to collect retirement benefits; 35 years of service to collect maximum benefits; basing pension payments on an average of the worker's highest-paid five consecutive years instead of the current three-year average; and mandating that PERS be deemed fully funded before more benefit increases can be approved.

These measures would do little more than buy more time for this fatally ill patient. The state should move all future hires into a defined-contribution, 401(k) style retirement plan that frees taxpayers from the burden of providing lavish government retirements while scrimping to save for their own.

But these recommendations would at least represent some progress in reforming Carson City's biggest sacred cow. Every year lawmakers put off needed changes, the final bill for taxpayers gets bigger.