The pension system for state employees has taken the same stock market hits that have battered investment returns for private retirement plans. The C.E.O. of the Iowa’s public employee retirement system, (IPERS), Donna Mueller, told a legislative committee there’s enough money to pay retirees today. But Mueller says things will get worse unless changes are made.
"I’m not concerned about the immediate need, but the longer we take to act, the bigger the problem grows," Mueller says. Mueller says there’s been a 600-million-dollar increase in unfunded liability over the last six years. IPERS planned for the future needs of retirees with the assumption they would get a 7.5% return on investments.
Investment Officer Carl Cook says investments have declined in value almost 18 percent so far this year, and something has to be done.
Cook says, "Unless we have a miraculous turnaround in investment markets which none of us see short term." IPERS recommended a four percent increase in the employee and employer contribution rate after the last bear market. Lawmakers agreed to only half of that. Mueller says some of the solutions include raising rates, or reducing future benefits.