KSTP-TV finds big public pension payments — and taxpayers making up shortages

A story on public pensions in Minnesota shown Sunday on KSTP-TV said more than 300 retired public workers get more than $100,000 in annual pension payments at a time that the state is struggling to pay for guaranteed pension raises.

That includes a retired Hennepin County worker getting $183,000 a year, a former Wayzata school superintendent with $176,000 a year, a former Hennepin County administrator at $170,000 a year and a retired Ramsey County sheriff with $157,000 a year.

The payments are legal and guaranteed.

Said the story:

Here’s how a public pension works:  important to know because you help pay for it. An employee contributes 13% of their income to a pension. Their public employer contributes 14%. The money is invested and the gains from those investments make up the remaining 73% of an employees promised pension. If the investment return doesn’t match or exceed what’s needed to make up that 73%, the money must come from somewhere.

Right now, the state is $246 million short of that difference on a yearly basis. Taxpayers make up the rest. One more thing, public employees are guaranteed a return on their investment of 8%. That’s down from 8.5% last year.

While many public employees qualify for two or more pensions, KSTP had trouble finding any who’d talk about “double dipping.” But Ramsey County Commissioner Tony Bennett agreed to an interview. He has a police pension, a legislative pension and will soon qualify for a third pension when he leaves the Ramsey County Board at the end of the year.

Said the story:

Bennett collects $54,000 a year as a retired St. Paul Cop.  Another $17,000 a year for his time as a state legislator and now earns a salary of $84,000 a year as a Commissioner.  When he retires, Bennett will collect a third pension that he is entitled to.  That makes him what some call a triple dipper — something opponents raised when he ran unsuccessfully for reelection as a County Commissioner earlier this year. To his critics he says: “I guess I would say some of them ought to walk in the shoes of the people who have had to do them. I don’t begrudge any police officer or fireman, or soldier today who is getting a pension from anything and what they’ve had to go through.”

State Rep. Morrie Lanning, a Republican from Moorhead, suggested that the state consider lowering the rate of return promised to state employees.

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Comments (2)

  1. Submitted by Alex Cecchini on 10/29/2012 - 04:18 pm.

    The KSTP Article

    .. Seems to attack and use large dollar figures to rile people up. It cites a $246M shortfall this year in what pension holders are owed vs. what the pension fund holds. Is it me or is this simply because we are still climbing out of a terrible recession that likely left the total pension funds much lower than expected? As one of the sources of KSTP’s article states (http://goo.gl/iGCAL):

    “Prior to the recent recession, the State Board of Investment regularly bested an annual return of 8.5 percent on PERA’s assets. Those assets earned 23.3 percent in Fiscal Year 2011. Based on 2011 year-end valuations, SBI’s investments have maintained an annualized return (after paying investment expenses) of 8.8 percent over the last 20 years, and 10.13 percent over the past 30 years. That’s despite two recessions in the past decade.”

    Seems like the old 8.5% annual expected return (now lowered to 8.0%) is LESS than the fund has earned over the past 20 and 30 years (after investment expenses).

    KSTP was also obviously trolling by calling out certain people by name, occupation, and yearly pension payout to enrage the masses.

  2. Submitted by Dennis Tester on 10/29/2012 - 07:56 pm.

    Nice ROI

    So much for the argument against privatizing social security. Throw me in that briar patch.

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