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January 2012 Policy Study, Number 12-1

   

Iowa's Privileged Class: Time for a Change!

    IPERS Pension Payments
   

 

There are three legs to the IPERS stool – incoming contributions, whether by the state government directly or through payroll deductions, the investment returns, and finally, the amount of benefits paid out. The investment return leg is heavily influenced by factors outside management’s control, as demonstrated from 2008 to 2011. The contribution levels and promised benefit payouts are directly controlled by the State Legislature.

 

In FY2011 the “Average Annual Benefit” of retired employees was $13,939, up from $13,139 the previous year. While $14,000, or about $1,150 per month, does not seem to be much to retire on, most retirees also receive Social Security payments and should have their own, privately invested assets.

 

However, the “average” does not present the full picture. There are a large number of retirees making significantly more than $1,150 per month in IPERS benefits. There are 21,140 retirees, or 21.5 percent of the total 98,312, who make more than $2,000 per month, or about two-thirds of the average annual income of a working Iowan.

 

Within that group, at the high payout end, there are 424 retirees who receive at least $5,000 per month, or over $60,000 per year in retirement. The total cost to the state and taxpayers for these 424 people is almost $25.4 million annually.

 

There are, in fact, 37 individuals who receive over $7,000 per month, or over $84,000 per year.[66]

 

Of those 424 individuals receiving $5,000 or more per month, over 50 percent worked for our local school districts.

 

IPERS Pensions of $5,000/month or more

 

The vast majority of these districts (248 of 359) have less than 1,000 students total K-12. Only eight districts have more than 9,000 students.[67] Yet 214 public education retirees are receiving $60,000 or more per year in retirement.

 

The education establishment continues to argue that the schools are not receiving enough tax funding; that salaries are not sufficient. Governor Branstad’s proposed teacher pay structure reforms were dropped from his overall education reform proposal based on significant pushback from the teachers’ union and educational establishment. Certainly the retirement salaries of at least some educators would seem to be more than sufficient.

 

   

 

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