A Republican committee at the statehouse today heard from experts on IPERS, the Iowa Public Employee Retirement Fund.
IPERS has unfunded liabilities of $5.6 billion.
But officials recently updated certain assumptions, including expected investment returns, that could push the projected shortfall higher.
There were bad decisions in ignoring the alarm bells. -IPERS CEO Donna Mueller
The new assumptions foresee a 7 percent return on investments, down from an earlier estimate of 7.5 percent.
That means unfunded liabilities in the pension fund could approach $7 billion.
CEO Donna Mueller says there are several reasons why the fund has not kept up.
“Since 2002 until 2014 the contributions paid into IPERS did not meet with the what the actuary stated every year was required to fund the benefits,” Mueller said.
Two recessions played a role, as well as improved longevity for retirees.
“It hasn’t been necessarily bad management,” Mueller said. “There were bad decisions in ignoring the
alarm bells.”
Officials are addressing the problems through changes enacted in 2010.
Employers and employees now pay variable contribution rates into the system. Salaries are averaged over a longer period of time, and early retirement penalties were revised.
The committee heard an analysis of IPERS from representatives of libertarian think tank the Reason Foundation that was requested by the GOP.
Some public workers and their allies fear an overhaul of IPERS that would not be in their interest.
“Public employees are on edge after the past year and rightfully so,” said Sen. Matt McCoy (D-Des Moines).
Public employees are on edge. -Sen. Matt McCoy
A bipartisan legislative committee is scheduled to meet on the issue later this year. But Sen. Charles Schneider (R-West Des Moines) got a jump on that by calling Tuesday’s meeting.
“I disagree with the process,” said Sen. Jeff Danielson (D-Cedar Falls).
Schneider pledged to hear from all sides.
“I hope we can continue to have a conversation to the extent one needs to be had,” Schneider said.