In The News › Public pension funds in greater New Orleans more generous than most in US, BGR report says

Public pension funds in greater New Orleans more generous than most in US, BGR report says

Public pension funds in Orleans, Jefferson and St. Tammany parishes are more generous than in most of America, and costs to local taxpayers have been rising rapidly over the past decade, according to a study released Friday by the Bureau of Governmental Research.

The report, the second in a series on public pension plans, examined 18 pension systems in the greater New Orleans area, reviewing the costs to the public of administering the plans and comparing their benefits to what’s available in the private sector. The report also benchmarks local plans against other public sector plans.

The government’s required pension contributions have risen steadily over the past decade for myriad reasons. Chief among them: investment losses following a rocky stretch including the dot-com bust in the early 2000s, the stock market collapse in 2008 and the bursting of the real estate bubble in 2009.

In 2010, the tab for picking up pension obligations cost Orleans Parish about $122 million, breaking down to about $861 per household, according to the report. In Jefferson Parish, pension plans cost $88 million, or $519 per household. In St. Tammany Parish, that figure was $58 million, or $660 per household.

In Orleans, nearly half of that high annual cost is attributable to the city’s Firefighters’ Pension and Relief Fund, which cost about $54.1 million in 2011, or about $1 of every $9 that the city spent on general operations.

The study calculated the benefits that a new employee, hired now at $40,000 per year, would receive in retirement from each of the 18 systems after working for three decades, in some cases factoring in Social Security benefits. Louisiana is one of a handful of states in which most public employees do not participate in Social Security, so they tend to depend to a greater degree on their pensions.

The study then compared those benefits to the amount that a typical public sector employee — using the national median — would have gotten in retirement benefits. It concludes that 17 of the 18 plans had benefits more generous than the national median. New Orleans’s pension plan for firefighters was three times more generous, according to the report.

The report also states that the annual benefits to the same prototypical local public employee exceed those available to a similarly situated person in the private sector, in amounts ranging from $4,200 to nearly $20,000 a year. BGR said it looked into whether more generous public sector retirement benefits are necessary to offset pay differences between the public and private sectors, but could not find any recent analyses of local differences.

In compiling the research, BGR president Janet Howard said she was struck by how the local pension plans compared with the public sector nationally.

“What jumped out is that they were more generous than what was going on elsewhere in the private sector, but what was more surprising was how they benchmarked against other public-sector plans,” Howard said in an interview.

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