State will save by changing retirement plan for its workers
The state can save nearly $500,000 a year by moving part-time employees out of Social Security and into a private deferred compensation plan structured like a 401K.
The proposal before the Board of Examiners next week would move all new hires who are ineligible for the Public Employees Retirement System into the alternative plan beginning next year.
Only full-time workers or those who work more than a certain number of hours a week or year are eligible for PERS. Director of Administration Perry Comeaux said those not eligible are now in Social Security.
They contribute about 7.5 percent of their pay and the state matches the amount.
Changing them to an alternative plan, he said, would save the state the money it now contributes. The amount each employee contributes to the federal system would instead go to an account very similar to a 401K.
Most of those involved are in the parks and forestry divisions and the Nevada Department of Transportation.
Comeaux said existing part timers would have the option of staying with Social Security. Only new hires would have to join the alternative plan. But he said if all existing part-time positions were moved to the alternative plan, “we estimate that would save the state as much as $460,000 a year.”
Comeaux said it would have an even more dramatic effect on the university system, which has many more part-time workers – including many teachers – than the state.
“We think it could save them a couple million bucks,” he said.
University system finance officials could not be reached for comment. Comeaux said the new plan has some advantages for workers – especially those who leave state service for another job – because they can take their money with them.
“It would be a deferred-compensation program that would be available and penalty free,” he said.
He said the only workers who might object are those part timers trying to build up enough quarters in Social Security to qualify for a retirement check.
Reno, Carson City and Washoe County have already made the change, which was authorized by the federal government in 1990. Legislation authorizing the state to make the change was approved by the 2003 Legislature.