Bailey says ‘more work must be done to fill gap in future pension liabilities to protect taxpayers’
Today’s vote by the state Select Committee on Pension Policy recommends that the Pension Funding Council adopt an increase in life expectancy for public employees and is a “step in the right direction,” said Sen. Barbara Bailey, R-Oak Harbor, chair of the committee. “The time for using outdated formulas and skipping payments has passed. We need to get real with taxpayers about how we plan to fully fund state pensions and meet our obligation to retirees.”
The Select Committee sent the Pension Funding Council an extensive report by State Actuary Matt Smith that outlines a future shortfall of $4.4 billion based on the new life-expectancy levels. Men turning 65 today are expected to live to an average age of 84 years and women to an age of 86 years. For those state employees who retire 20 years from now, those numbers will increase by another year.
“The good news is that people are living a lot longer. The bad news is that pension contributions and policy are not keeping up with that reality,” said Bailey. “The budget implications and impact on taxpayers are enormous. Simply put, we can pay now, or pay a lot more down the road. The funding gap only gets worse over time.”
Bailey added that she hoped members of the Select Committee would recommend the added policy changes and rates that fit the new lifespan realities. “This was a consensus vote that moves us in the right direction and puts members of the Pension Funding Council and Legislature on notice that it is time for a reality check,” said Bailey, “However, there is still more work to be done and waiting for a financial crisis is not the way to deal with the problems.”