- Associated Press - Wednesday, December 2, 2015

DES MOINES, Iowa (AP) - A report says Iowa’s largest public employees’ pension fund has a long-term shortfall of about $5 billion.

The Des Moines Register (https://dmreg.co/1OG1lVe ) reports that Gov. Terry Branstad was briefed Tuesday on the status of the Iowa Public Employees’ Retirement System, which has 346,000 members. The report says the pension fund’s assets total about $28 billion and is nearly 84 percent funded, slightly up from a year ago.

The system serves current, former and retired employees of state government, cities, counties and school districts. The contribution rate by local government and state public employees to the main pension fund has increased in recent years to almost 15 percent of an employee’s earnings.

Donna Mueller, the fund’s chief executive officer, says the report shows progress and stability.

Mueller said the system’s $5 billion in unfunded liabilities could be paid off in 23 years.



Iowa State Treasurer Michael Fitzgerald, who serves on the investment board, says the program is making good progress but changes still need to be made. Fitzgerald says those changes include a lower cap on retirement benefits to prevent some highly paid public employees from “gaming the system” to secure pensions well in excess of $100,000 annually.

Gretchen Tegeler, a former director of the Iowa Department of Management who is now president of the Central Iowa Taxpayers Association, said she is concerned the program’s assumed return of 7.5 percent annually for investments is too optimistic. She said the situation could be addressed by slightly increasing contribution rates.

“I think they need a much better understanding of the risks they are carrying,” Tegeler said.

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Information from: The Des Moines Register, https://www.desmoinesregister.com

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