Imagine no recession. It's easy if you try and if you're a government retiree.
While the rest of the world has watched dreams of RVs and once-in-a-lifetime vacations wither with their 401(k)s, the vast majority of the public sector has been worry-free when it comes to retirement pensions.
This year, 180 city positions have been eliminated due to a brutal 2009 budget season in Colorado Springs, leaving scores out of work. But the city has yet to discuss slashing pension programs that cost more than $16 million in 2008 (and to which it still owes another $2.2 million) and are expected to cost more this year.
That could change soon. At the request of City Councilor Tom Gallagher, the city plans to discuss breaking off its relationship with the Colorado Public Employees' Retirement Association (PERA).
The entity, governed by the state Legislature, provides a cushy retirement package to many city workers and employees of the state, school districts, other local governments and even some private businesses.
"Every year, the very first thing that we get hit with are PERA increases, and that is readily foreseeable because PERA is a defined benefit plan," Gallagher says. "There's a reason why everybody stopped doing 'defined benefit' because you will never get out from behind the 8-ball."
How good is the plan? These days, non-public safety, local government employees can expect to pay 8 percent of their monthly salaries into the pension. In exchange, the government pays 10 percent of each employee's salary into the fund, plus a little extra to fill the gap between the fund's assets and liabilities a gap that has grown since the turn of the millennium.
In 2009, the city will pay an extra 2.8 percent. By 2013, it will be an extra 6 percent.
Meanwhile, an employee who works 25 years for the city and makes a top average salary of $100,000 would bring home $62,500 a year in retirement and that figure would be adjusted upward for cost-of-living increases.
PERA isn't the only great deal in town. The city's firefighters and police officers have their own pension plans. One perk for some public safety workers is the Deferred Retirement Option Plan; when members reach retirement age, they can keep working for a set amount of years and make a salary. Meanwhile, their retirement earnings are invested, then handed to them when they retire.
Councilors last changed the fire and police retirement plans in 2006. And while PERA's the biggest target today, many councilors have voiced support for at least discussing all the city's pension and benefits plans.
It's unlikely that current employees would see their pensions change. But councilors offer many reasons to consider offering new hires a different kind of plan.
Darryl Glenn and Gallagher say the city, with a single benefits package, could remove confusion over multiple health and retirement benefits for city and enterprise employees, while also allowing the city to buy in bulk, essentially, and pay a lower rate. Margaret Radford says considering changing benefits is better than axing even more jobs as the recession drags on. Randy Purvis says it's simply not fair to ask taxpayers with 401(k)s to fund the city's pensions.
"The have-nots will be paying for the haves," Purvis says.
Terri Velasquez, city finance director, says an initial presentation and formal discussion is still months away. In the meantime, city officials will determine the extent of its legal options. After all, they're looking at treading a long-untrodden path; no local government has shed PERA since the early 1990s.