A Message from State Treasurer Michael L. Fitzgerald, IPERS Board Member

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Treasurer Michael Fitzgerald serves on the board of IPERS and is trustee of the fund.

DES MOINES, IA (02/24/2017) (readMedia)-- On January 30, 2017, I issued a statement telling IPERS members they should be concerned about the future of their benefits.

Since that time, my concern has continued to grow. After witnessing how quickly the legislature and governor were willing to move without input from the people regarding the ability for public employees to bargain for their benefits, I am even more troubled. It is important to get the facts out before the public debate is cut short.

IPERS is a defined-benefit plan that provides its members with a monthly lifetime retirement based on a formula including the employee's earnings and years of service. Members include teachers, sheriffs, correctional officers, local and state public employees. Employees' contributions are pooled and invested with the employer contributions. After seven years of public service, IPERS members are "vested" and eligible for a retirement benefit. This is the promise we have made to them.

As state treasurer, an IPERS board member and trustee of the Fund, I can tell you that Iowa has worked hard over the years to ensure IPERS is on solid ground. And we are. But you don't have to take my word for it. This quote is part of an article signed by both Governor Branstad and Lt. Governor Reynolds, released in January of this year. "It's the long-term performance that's important and indicates financial health. IPERS is secure, strong and sustainable. Simply put, it's good for Iowa." The entire article is on the IPERS website at https://www.ipers.org/sites/default/files/SAFR-2016-LR.pdf.

The National Institute on Retirement Security (NIRS) stated that defined benefit plans like IPERS, ". . .save money due to longevity risk pooling, maintaining a more balanced portfolio over a longer time, and achieving higher investment returns due to professional management and lower fees." The recent discussions about IPERS changes are not about whether the fund is in good shape or costs too much. This is just one more public employee benefit that is under attack.

Beware of those who say that a hybrid plan would allow commitments to be honored while moving significant numbers of employees to a non-IPERS plan. There is no defined "hybrid" model, but in states that have implemented a hybrid plan, the employees were the ones that suffered. And I predict that if Iowa implements a hybrid plan, benefits for current employees will be cut and the ability to recruit new employees will be hindered.

So we know who gets hurt, but who benefits if this change is made? A hybrid model would privatize the investment of employees' and retirees' pensions. Individuals will pay more and private companies will reap the benefit.

We have made adjustments over the years to ensure the success of IPERS. We do not need to tear this plan apart, but rather continue to manage it well. Below are some facts about IPERS.

• All public employees are required to put in 5.95% (or more) of their paycheck;

• The average IPERS benefit is $16,000 per year;

• 88% of the retirement payments stay in Iowa, helping Iowa's economy; and

• Over 30 years, IPERS has returned an annual return of 8.83%, well above the 7.5% assumed rate of return.

We made a commitment to our public employees. As we have seen recently, those commitments have not meant much. Once we take away good pay and health insurance, a strong retirement plan may be the only negotiating tool to recruit and keep the best and the brightest to teach our children, protect our prisons and provide vital services to Iowans.

So, IPERS is secure, strong and sustainable. IPERS has helped Iowa's public employers attract and retain quality workers. IPERS helps Iowans in their retirement years and injects money into Iowa communities. We must maintain IPERS for all public employees and protect the value that it brings to Iowa.

Submitted by Michael L. Fitzgerald, State Treasurer and IPERS Board Member