Local government pensions need a cost-of-living boost
In a time of stagnant wages and reduced job benefits, many taxpayers have little sympathy for how inflation and low interest rates are shrinking pension payments to government employees. That attitude has spread to government officials who are more concerned about reining in benefits than they are about keeping faith with those who have retired from government service.
But those emotional and political attitudes shouldn’t be allowed to derail what’s fair and needed. Indeed, even the miserly North Carolina General Assembly in the latest state budget included a 1 percent cost of living increase for retired teachers and state employees. But that increase doesn’t cover another group of public employees, the more than 63,000 local government retirees in North Carolina. They are covered by a separate pension fund supported by contributions from local governments and their employees, the Local Government Employees Retirement System.
The average local government pension of $17,500 in 2008 now has the buying power of $15,425, a value loss of $2,075. For a retiree trying to keep up with rising taxes, utility, housing and health care costs, the loss has a significant effect.
Local governments could provide a 1 percent cost of living increase by increasing their payrolls by a mere 0.3 percent. They can and they should. It’s not only a matter of fairness to those who worked for local government in part because of the pension benefit. It’s also a matter of providing quality local government services today. Low pay by local governments is making it harder to attract and retain employees, especially in growing areas where costs are climbing faster than salaries.
Providing a solid pension benefit makes local government service more appealing. Letting that benefit wither has the opposite effect. Local governments should fund a 1 percent cost of living increase for local government retirees.
This story was originally published September 12, 2017 at 9:10 AM with the headline "Local government pensions need a cost-of-living boost."