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Wednesday, August 20, 2008

Ind. Gov't. - Still more on: "Indiana taxpayers contribute millions to lawmakers' generous pension plan"

Updating this ILB entry from August 15th, the Fort Wayne Journal Gazette has an editorial today headed "In a different pension class." Some quotes:

Are you among the growing number of workers whose employer does not offer a pension plan or whose employer has frozen existing benefits?

Don’t expect your state legislators to feel your pain. Their pension plans are in excellent shape thanks to the 4-to-1 match Indiana taxpayers have been contributing since 1992. And don’t feel sorry for the lawmakers when their plans are pared down, effective Jan. 1. The new plan is still far more generous than what almost all other workers enjoy.

Details about how the generous perk has accumulated are now available only because the information was leaked to the Indianapolis Star. Several years ago, legislators adopted a law keeping confidential specific information about their publicly funded retirement benefits.

What the leaked information revealed were benefit packages for part-time work far exceeding anything found in the private sector. For the past 16 years, the state has been kicking in a contribution equal to 20 percent of a legislator’s salary – compared to private-sector contributions that generally don’t exceed 3 percent. * * *

The generous packages represent the consolation prize lawmakers awarded themselves in lieu of raises in 1989. With bipartisan support, they created the 4-to-1 match, and it was finalized three years later. That didn’t eliminate their complaints about an $11,600 base salary, however. So in 2007 they made a grand show of cutting their pension benefits – while increasing their pay. * * *

What they did was to almost double their base salaries but cut the 4-1 pension match to 2-1 – a hit that won’t be terribly noticeable. Under the old plan, taxpayers’ 20 percent contribution amounted to $2,320 of the $11,600 base. Effective next year, taxpayers will contribute about 9 percent of the $22,600 base salary – or $2,034. [ILB - see below]

In addition, lawmakers tied their salary increases to the average raise given every year to state employees of similar salary brackets. That means senators and representatives will never again find themselves in the uncomfortable position of voting themselves a raise.

This is not quite correct. As the ILB pointed out in the Aug. 15th entry:
after Dec. 31, 2008, "salary" for purposes of computing the pension benefit, includes (1) salary, (2) per diem, and (3) leadership allowances.

Posted by Marcia Oddi on August 20, 2008 08:57 AM
Posted to Indiana Government | Indiana Law | Legislative Benefits