BY RAMONA DU HOUX
March 4, 2011
MYTH: Maine’s pension fund is in a crisis and on the brink of insolvency.
FACT: Maine’s pension fund is NOT in a crisis.
• As of Fiscal Year 2010, the Maine Public Employee Retirement System paid out $660 million in benefits. As of December 31, 2010 the market value of the pension fund’s assets were $10.3 billion. Based on those numbers the state retirement system could continue to pay benefits for over 15 years at the 2010 cost level without making any additions to the fund. (Source: 2011 Pension Cost Report , 2010 Comprehensive Annual Financial Report (CAFR)
• A Pew Research report released in February 2010 says state pension plans in almost every state are underfunded. Maine, however, was determined to be a “strong performer” when addressing the liability for retiree pensions. The report said the state’s pension obligations were only 63 percent funded in 1997; but by 2008 were 80 percent covered prior to the market downturn. Current funding level ratio is 70.4 percent. (Source: Pew Research state pension report , “>Maine State Employee and Teacher Unified Retirement Plan )
• So, State workers and teachers contributed 58 percent of the current cost. For comparison: the state’s contribution to the normal cost of retirement is 5.5 percent. The average pension is $19,300 per year. That’s $1,608 a month. (Source: Maine State Employees Association)
• State workers are ineligible for Social Security (Source: Social Security Administration )
State workers have taken furlough days, increased contributions to health care, frozen merit pay, raises, and cost-of-living adjustments.
State workers alone have already been subjected to over $146 million in wage reductions and benefit package since 2003. These include $34.6 million imposed by the legislature in the current two-year state budget, and over in $100 million defunded from the State Employee Health Plan. (Source: Maine State Employees Association )
• State workers have made monthly contributions to the retirement fund without ever missing a payment, while the state has not always made good on its payments.