The Indiana Law Blog has flagged an opinion column on how public pensions are in trouble. It notes that Indiana is one of the places where public pensions are in trouble.
I haven’t seen numbers lately, but Indiana’s pension trouble is not a new problem. This train has been rolling for a long time. I remember about 12 years ago, when Indiana was running a surplus, some of the folks I worked with thought it was high time to devote a lot of that surplus to stabilizing the underfunded public pensions. (They were not exactly unbiased on the subject because they were folks who were devoting their careers to working for the State, in part, because of the promised pension.)
This is one of the areas that I’m trying to educate myself about a little more. While it is true that public employee pensions are a disaster nationwide, I don’t think it is true that Indiana is all that bad off.
It looks like there are two classes of employees, those employed before 1995 and those employed after. Those from before ’95 are in one system that is pay as you go. This is why Indiana gets a bad rating, because the legislature needs to fund these pensions every year.
Those after ’95 are in a fully funded pension system. The state pays 7% of the employees wages into the system every year, which is pretty good from the employees persepctive.
I’m still getting information as to retirement ages, how much they get in retirement, etc. etc. etc. I think that is a bigger issue than if the pensions are funded or not. But at first blush, it doesn’t seem like their getting absolutely outrageous pensions, like they do across the border in Illinois (and why Illinois is $13 billion in the hole this year).
7% of your income into the system is pretty good? Sure, if you work in govt long enough to become vested in the system, and if the system delivers for you on the back end. Otherwise, it’s just a 7% tax, which for the average govt worker is money better in your family budget.
I worked for just short of 4 years in county government. Every nickel I put in is a nickel I’ll never see again.