EDITORIAL: Snow’s ‘retirement’ highlights need for PERS reform

The Nevada Public Employees Retirement System wouldn’t be in such bad fiscal shape — and wouldn’t desperately need such drastic reforms — if it provided benefits only to retired government workers.

But taxpayers, who are the backstop for the state’s underfunded pension plan, were reminded again last week that PERS beneficiaries do not need to wait until retirement — until their 60s, when they can no longer work or can only handle a part-time schedule — to collect generous, guaranteed-for-life payments. In fact, they can collect generous, guaranteed-for-life payments in their 40s or 50s while working other jobs without penalty.

The latest official preparing to cash out of public service and significantly boost his standard of living is Henderson City Manager Jacob Snow. Mr. Snow, 50, announced he would “retire” this summer after three years in that position.

But he’s not retiring. He’s resigning to work somewhere else. He can do so at such a young, productive age because he will have logged 30 years of public service in Southern Nevada. Government employees become fully vested in PERS after 30 years of service, regardless of age. (For public safety workers such as police officers and firefighters, the threshold is 25 years.)

Mr. Snow, former general manager of the Regional Transportation Commission of Southern Nevada, is quitting in the prime of his working career because PERS gives him a powerful incentive to do so. When he leaves Henderson, he can start collecting an annual pension worth at least $170,000 per year. Mr. Snow will collect this benefit for the rest of his life, and he is free to collect income from other jobs for as long as he wishes.

Let’s say Mr. Snow lives to be 85. He would end up collecting his pension for 35 years, five years longer than he actually worked for taxpayers. Including cost-of-living increases to his pension, he would collect more than $6 million in PERS benefits — more than he earned in salary over his entire career.

The argument that PERS merely provides a dignified standard of living to retired government workers may be true for some people, but for many career government workers — such as Mr. Snow and former Clark County Fire Chief Bertral Washington, who recently “retired” at age 43 to become fire chief in Pasadena, Calif. — pension benefits allow them to amass considerable wealth and financial security at public expense.

It’s unfair to taxpayers to have to support such generous benefits when they can barely save for their own retirement. But Mr. Snow, Mr. Washington and others put a financial strain on the underfunded PERS portfolio, to boot. When properly measuring the risk of PERS investments and its obligations to current retirees and current workers who one day will retire, the system has an unfunded liability approaching $40 billion.

It makes no sense to pay people to take new jobs, and supplement the salaries of those jobs, when those people are in their 40s and 50s and wouldn’t “retire” otherwise. Rising pension contributions already are squeezing public services from education to public safety. Without major reforms, these expensive golden parachutes will stress PERS to the point that it requires a taxpayer bailout.

The Nevada Legislature will consider a variety of pension reforms this year, from the elimination of service purchases that allow employees to retire even younger, to the creation of a new, defined contribution, 401(k)-style retirement plan for new hires. But one of the simplest ideas could save as much taxpayer money as anything: Establishing a minimum retirement age that parallels Social Security eligibility, and reducing or eliminating benefits for those who continue working.

Make the Public Employees Retirement System of Nevada a retirement benefit, not a gravy train.