Iowa Senators review pension system
July 27, 2017
As a legislative pension year approaches, a group of Senators met Tuesday, July 25 to hear about the status of the Iowa Public Employees Retirement System (IPERS), which is the pension system for most state employees. Donna Mueller, the CEO of the system gave an overview of the history of IPERS and some of the market driven and legislative changes that have taken place to IPERS. She said there was more than a decade of intentional underfunding of the system, retroactive benefit increases and two recessions, which has impacted the funding levels. There is an unfunded liability of about $8.3 billion. At current projections, including meeting the actuarial estimated rate of return, the system will be fully funded in twenty six years.
The Reason Foundation, a group that has done bipartisan pension work in other states, presented on its analysis of the system, suggesting that actuarial historical looks at the rates of return are not necessarily the most accurate approach to predicting future rates of return, and that the chances of meeting the actuarial projections for rates of return (which in turn help set contribution rates) are not realistic. Their analysis suggests that a shorter lookback would be more accurate in projecting future returns, in particular because of current lower returns on bonds, which make up a significant percentage of the IPERS investment portfolio.
Senator Schneider who led the efforts said he wants a bipartisan effort to address any pension issues. Senators Danielson and McCoy pointed out that public employees are on edge after last session and want to be included in discussions.
ABI will follow pension issues and any meetings of the Public Retirement Systems legislative Committee prior to and during the upcoming legislative session. For more information, contact Jessica Harder at firstname.lastname@example.org.
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