Pension Improvement Discussions Falter
Efforts to negotiate improvements in public employee pensions this year
appear to have failed.
Talks broke down in recent weeks, said WEAC Executive Director Don Krahn.
This week, a coalition of public employee groups, including WEAC, rejected
a plan offered by Rep. Judy Klusman, co-chair of the legislative pension
committee.
That plan would have raised initial pensions for most public employees
by just over 3% but would have made any future pension improvement less
likely. In previous discussions, public employee groups had eyed increases
equalling 12.5%.
Efforts to improve pensions were weakened by opposition from municipal
employers and by an actuarial report that warned that longer life expectancies
and less job switching had added to pension costs.
The Legislature is scheduled to meet just two days next week, then adjourn
until January. Legislators and the governor have said any deal would have
to be approved in that short session because they were not inclined to
approve pension improvements in 1998, which is an election year.
The unions' proposal would have provided an across-the-board 0.2 percentage
point increase in the multiplier in the Wisconsin Retirement System formula
for years of service prior to Jan. 1, 1998. (Pensions are based on the
following formula: years of service times 1.6% (0.016) times
the average salary of a person's three years of highest earnings.) The
union plan would increase the multiplier from 1.6% to 1.8% for most people.
The change would increase benefits for experience gained by January 1,
1998. The proposal called for an increase from 1.6% to 1.65% for years
of service after January 1, 1998.
However, Klusman's plan would have only increased the multiplier to 1.65%
before and after January 1, 1998. In addition, it would have restructured
the system to eliminate the account -- called the TAA account -- which
reflects unrealized market gains. Without access to that fund, it would
be very difficult to finance any future pension increases, Krahn said.
Klusman's plan uses money from the TAA account primarily to help municipalities
pay off an unfunded liability from 1989 pension changes.
Posted November 13, 1997