Whether a government employee or a taxpayer, you should be concerned Idaho’s pension system isn’t meeting investment goals.
An underperforming pension system could result in taking more money from employees’ paychecks to pay for retirement benefits. For taxpayers, it may mean higher taxes, reduced services or both.
The pension system, PERSI, disclosed recently the just-concluded fiscal year generated a dismal 1.53 percent return on investments. The target return is 7 percent. It’s the second year of performance misses. The 2015 fiscal year brought in a little more than 3 percent fund growth. Prior years have more than met investment expectations, offsetting the headache a bit.
But two years of less-than-stellar investment performance means government agencies are starting to worry they’ll have to put more money toward retirement. Taxpayers already contribute more than 11.3 percent of payroll for general government employees. Increasing that contribution rate would force local taxing units to collect more from residents or reprioritize other needs.
For employees — most of whom contribute, 6.79 percent of their salaries to the pension system — take-home pay could go down if mandatory contribution rates go up. The most recent increase in contribution rates came three years ago.
Idaho officials like to boast that their pension system is among the best-run in the nation, and it may well be. But it’s an expensive affair, a burden shouldered by taxpayers and government employees/Wayne Hoffman, Idaho Freedom Forum. More here.