Fund shortfall might require higher contributions
DES MOINES, Iowa -- Taxpayers should not bail out the state's largest employees' pension fund, which is more than a billion dollars short of money, some key lawmakers say.
House Minority Leader Pat Murphy, a Democrat from Dubuque, Iowa, said Friday that workers covered by the Iowa Public Employees Retirement System should pay more in future years.
"I don't expect us to use any money out of the (state's) general fund now to take care of the retirement system," Murphy said.
The pension system, which has taken a hit in the stock market, needs a 40 percent increase in annual contributions to remain financially sound. Current estimates indicate it has a $1.2 billion long-term shortfall.
Iowa pension officials are looking at increasing contributions from government employers and employees from 9.45 percent to 13.25 percent over three or four years.
"I do think that's something we seriously have to look at, just the contribution level," said House Majority Whip Libby Jacobs, R-West Des Moines. "I'm not at the point of saying, absolutely, employees have to do that, but we have to include that in the mix of the discussion. I think that's critical."
Murphy and Jacobs made their comments Friday at a taping of Iowa Public Television's "Iowa Press" program.
The 325,000 members of the pension fund include employees of state and local governments, schools, retirees and former employees.
Employers contribute 60 percent of money that goes to the pension fund, while employees contribute 40 percent. The contribution rate has not changed since 1979.
Jacobs defended the IPERS board, saying it is not to blame for the anticipated shortfall.
"I don't think they were playing or being overzealous with the employees' money," Jacobs said. "I think they did a very good job. They did not invest in high-risk stocks. It was still very strong, blue chip, good conservative investments. Unfortunately, the market did not favor any stock in the last couple of years."
The issue is one of many expected to be discussed when the Legislature reconvenes in January.