Back-to-back pay raises appear to be persuading many state employees and teachers to put off retirement, West Virginia Consolidated Public Retirement Board Executive Director Jeffrey Fleck said Wednesday.
Normally, about 1,000 employees file for retirement with the Public Employees Retirement System in the last three months of the year, he said. This year, that number is running at only about 400.
“We noticed it’s significantly lower than it has been in the past,” Fleck said.
Likewise, retirements from the Teachers Retirement System were down considerably this summer, following completion of the 2018-19 school year, he said.
The downturn, he said, is particularly notable because retirement numbers had been trending upward, as more and more Baby Boomers reach retirement age.
“I don’t know if that’s because of the pay raises that were passed, and people are figuring they’ll work longer,” he said.
But Fleck told the CPRB Board of Trustees on Wednesday the pay raises, averaging 5 percent each in 2018 and 2019, might be providing incentive for employees to put off retirement.
Under PERS and Teachers Retirement System plans, pensions are calculated based on the highest three pay years of the employee’s final work years.
That means employees would need to work another three years to get the full benefit of the pay raises in their pensions.
In many cases, the difference could be notable. A state employee with 25 years of service making $40,000 a year prior to the pay raises could boost his or her pension by more than $4,500 a year by staying on the job for three additional years.
Also during the CPRB meeting:
- Pension fund investments have been flat recently as slowing U.S. and global economies have resulted in sluggish stock markets, Tom Sauvageot, of the state Investment Management Board, told the board.
He said the pension funds have seen modest growth in the first months of the 2019-20 budget year.
“Things are trending a little bit better right now, but there’s still a lot of issues out there,” Sauvageot said, referencing the ongoing trade war with China, Brexit and the global economic slowdown.
- A court hearing on the CPRB’s efforts to revoke former Supreme Court justice Allen Loughry’s government pension for less than honorable service has been delayed until Feb. 4, 2020, CPRB counsel Jeaneen Legato told the board.
The status conference before Kanawha Circuit Judge Charles King was postponed from October as the 4th U.S. Circuit Court of Appeals is scheduled this month to hear Loughry’s appeal of his October 2018 conviction in U.S. District Court on 10 counts of wire fraud, mail fraud and lying to federal officers.
In January, Loughry’s attorneys appealed the CPRB’s decision, asking the board to seek a judicial determination as to whether he had rendered less than honorable service.
Under state law, a felony conviction for actions committed while holding public office or public employment constitutes less than honorable service.
Loughry is serving a two-year prison sentence in a federal correctional facility in South Carolina.