Will public employees here have to work longer?
Wisconsin state government workers are applying for retirement in record numbers — and for good reason. As more states and nations raise the minimum retirement age and pension funds dip to worrisome levels, changes could be on the horizon that will require state workers to stay on the job longer.
The state has received 4,063 retirement applications for 2010 through April, up 5.7 percent from 2009, The Capital Times reported.
Tom Gallagher, 57, of Madison qualified for full retirement benefits after 30 years with the state unemployment office. He receives 70 percent of his final salary, or about $4,000 a month before taxes, according to The Capital Times.
“By most accounts Wisconsin has one of the best public worker retirement plans in the country. Established in 1951, it has grown into the nation’s 9th largest public pension fund and the 29th largest pension fund of any kind in the world. Nearly 560,000 current and past public employees are covered — everyone except Milwaukee city and county workers, who have their own pension fund,” the newspaper reported.
Many states offer full benefits after 30 years of service with a minimum age of 55. But faced with stock market declines, some governments are making tough choices. Recently Gov. Arnold Schwarzenegger of California announced announced a deal with four state public employee unions to raise the retirement age by five years for newly hired workers. Last spring, Illinois raised its retirement age for new state workers to as high as 67, National Public Radio reported.
Beyond the U.S., entire nations have had to rethink retirement: France made headlines for its proposal to raise the official minimum retirement age from 60 to 62 by 2018, a move that prompted protests even from college students.
Will Wisconsin have to raise its minimum retirement age or change its state pension fund? Candidates for governor, including Milwaukee County Executive Scott Walker and Milwaukee Mayor Tom Barrett, say it’s possible.
As more Wisconsin baby boomers near retirement age, the Wisconsin Retirement System (WRS) could come under greater scrutiny.
Case in point: In a February 2010 report, the Wisconsin Public Policy Institute highlighted significant differences between more stable public sector pension funds and changing private sector pensions. According to the report:
In Wisconsin, 88% of employers offer defined contribution plans compared to just 8% that offer defined benefit plans – the kind that are offered by all government employers. Further, private sector pension contributions are significantly less than public sector pensions when measured as a percent of payroll, and the contributions as a percent of payroll have been declining. The average employer contribution for private sector plans is 5.3% of payroll, compared to the WRS, in which the employer contribution ranges between 10.55% and 13.3% of payroll.
What do you think? Does Wisconsin need to re-examine its retirement requirements? We welcome your comments.
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