Southern Nevadans are witnessing close at hand an example of how pensions for government workers — who can often retire at age 50 — compare to the far more meager expectations of private-sector retirees, in the pending retirement of Clark County District Attorney David Roger.
Coincidentally, it’s also a lesson in why many states could face fiscal catastrophe if they don’t soon enact major retirement reforms.
Mr. Roger is stepping down from his elected post on Tuesday after 25 years as a prosecutor. Mr. Roger is 50 years old and will start collecting an annual pension of about $150,000 upon leaving office. Nevada’s Public Employees’ Retirement System allows government workers to begin collecting pension benefits at any age if they’ve worked for 30 years. But PERS also allows government workers to “buy” up to five additional years of service toward their retirement eligibility, at a cost of roughly one-third their current yearly salary per year of service.
Mr. Roger “bought” five extra years of service to reach the 30-year mark. Because his base salary is about $202,000, those five years cost him around $330,000. Mr. Roger’s $330,000 purchase will allow him to collect 10 years of benefits worth some $1.5 million he otherwise wouldn’t be entitled to.
David Roger did nothing unethical. This is just the way the system works.
Nor is allowing public-sector workers to purchase additional years of service limited to Nevada. A Wednesday USA Today story examined precisely this practice, which is known in some areas as “buying air time.”
In California, where 34,202 people have bought air time since 2005, Democratic Gov. Jerry Brown recently proposed barring the practice. Kentucky, New Hampshire and Texas stopped or restricted air time purchases after finding they weren’t charging enough for the extra years, thus costing taxpayers money.
“Some states try to make air time cost-neutral to their retirement funds by charging an up-front sum equal to a worker’s projected extra lifetime pension payments,” USA TODAY reports. “But nine states set the price in ways that could cost taxpayers money.” That includes Nevada.
The New Hampshire legislature barred air time in 2007 after finding it was costing the retirement system $25 million to $40 million.
The Nevada Legislature needs to take heed. Then, if Silver State lawmakers lack the political will to put future public-sector hires into a defined-contribution, 401(k)-style retirement system, they should at least quit paying pension benefits to anyone younger than 60.
After having spent years to train them, the state must stop giving productive government workers such irresistible financial incentives to quit.