By Thomas Mitchell

Thomas Mitchell

Thomas Mitchell

We knew Nevada’s state and local government employees had generous pension benefits, but now a researcher at the American Enterprise Institute has done the calculations and found Nevada’s public pensions are the richest in the nation — $64,000 a year or more than $1.3 million in lifetime benefits. That doesn’t include public-safety workers, such firefighters and police, who can retire earlier and generally have higher salaries, especially in Nevada.

Compare this to the average annual Social Security benefit of $14,220 a year.

Andrew Biggs, a resident scholar at the AEI, calculated what those retiring in 2011 and 2012 from public employment would be paid in pension benefits based on the pay and benefits in each state. has posted online what current retirees in Nevada are being paid in benefits.

“Just as annual public pension benefits vary by state, so do lifetime benefits,” Biggs writes. “The most-generous benefits are paid in Nevada, where the average full-career employee will receive more than $1.3 million in pension benefits over the course of his retirement. In the four next most-generous states — Alaska, California, Colorado, and Oregon — lifetime benefits exceed $1.2 million. A wealthy, high-cost state such as Connecticut offers a typical full-career employee more than $1 million in lifetime benefits, but so does a relatively low-cost state such as West Virginia.”

Biggs recommends that states switch from defined-benefit plans to defined contribution plans, similar to 401(k) plans, which has been called for but ignored in Nevada for years.

In 2011 Biggs studied the finances of the Public Employees’ Retirement System of Nevada and found that, when using fair-market valuation, PERS has an unfunded liability of almost $41 billion. He estimated annual contributions to cover accruing pension costs and amortization of unfunded liabilities should be $5.8 billion. The stare’s entire annual general fund budget is only $3.3 billion.

Biggs also suggests that government pensions should be calculated based on career earnings rather than final wages at retirement. “Social Security already does this, using adjustments to account for inflation and the growth of wages over time,” Biggs says.

Biggs fails to mention that some public employees get a “spike” in salary in their final years to boost their pension payouts.

“Many public plans have already instituted lower benefits for new hires, and more are considering such reforms,” the researcher continues. “But it would be rare to find any full-career public employee who would receive a more generous pension in a private-sector job. Public employees should be willing to accept — and private-sector workers to demand — more equity in the generosity of their pension plans.”

In the 2013 legislative session Reno Republican Assemblyman Randy Kirner introduced a bill that would have modestly reformed public employee pensions. The bill garnered no discussion and no vote was taken. Assembly Bill 342 died without a whimper in the Assembly Ways and Means Committee.

Accounts of the bill’s demise could have had a dénouement right out of the Clue board game: “It was Ms. Carlton in the Ways and Means Committee room with an axe.” The bill never left Ways and Means, where pro-union Democrat Maggie Carlton was chair.

Kirner’s bill would have created a hybrid retirement program for new employees hired after July 1, 2014. It would have been a half defined-benefit and half defined-contribution plan. It included a cap on annual benefits and a prohibition against workers buying years of service credit. This little scam has allowed some public employees to work for 25 years, purchase five years of service credits, and retire at the age of 45 with 75 percent of their top pay adjusted for inflation for life.

In his book “Rethinking Public Sector Compensation: What Ever Happened to the Public Interest?” former Clark County manager Thom Reilly warns that public employee pension programs could be the next fiscal “bubble” to burst, requiring a massive taxpayer bailout.

Reilly, now a professor at San Diego State University, recently studied the lifetime compensation of a private sector secretary or administrative assistant compared to that of a Nevada public employee with the same job, in which both are just now retiring. He found that when you add the lifetime salary and the total retirement benefits, the public employee is paid 85 percent more — about $1.13 million more.

Among the solutions Reilly recommends in his book is: “First and foremost, people need to work longer and the retirement age should be raised.  … Public sector employees should not be retiring earlier than private sector ones.”


Thomas Mitchell is a longtime Nevada newspaper columnist. You may email him at He also blogs at