May 24, 2018
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Maine public employees retirement no Cadillac Plan

By Denis Cranson, Special to the BDN

I have read with interest the recent articles on the Maine Public Employees Retirement System, or MainePERS. There are a few important points that seemed to have been left out of this discussion in what is being called a “Cadillac Plan” by many.

Employees paying into the system have paid a higher personal contribution by percentage of each paycheck than have people such as myself who work under Social Security. This means that they have received less in their checks each and every week of their working lives.

Those who retired before 1983 also do not have the benefit of Medicare coverage. This means that for the rest of their lives they will pay 45 percent of the cost of their health insurance premiums. The annual increases in premiums over the past decade have more than doubled retirees’ costs in this area.

It is important to note that teachers and state workers never receive cost-of-living increases in their benefits despite what may happen in the economy. In other words, the amount they receive when they retire is what they will receive for the rest of their lives. Social Security recipients receive annual increases based on inflation.

Teachers retiring after 25 years of service receive one-half of their average income for their highest earning three years of work, and less if retirement is taken earlier. A teacher who may have worked a second job, had to

work summers due to very low starting salaries compared to other states, or who started teaching later in life has paid 6.2 percent in Social Security taxes from each check for these jobs, and this has been matched by their employer. When they retire, however, state workers and teachers do not receive their just entitlement under this program despite having paid into the system for 20, 30, or even 40 years. They receive only 40 percent of the benefit due to what is called “offset.” These “offset” funds help to support my Social Security and also yours.

It is important to look at all the information around MainePERS before rushing to judgment or actions on changes are taken. The bottom line is that the state of Maine failed to contribute its 5.5 percent obligation for many years. It also collected and then “borrowed” many of the funds paid in by state workers and teachers to balance previous state budgets.

When the system was established, defined-benefit plans were the norm. It is true that these largely have been eliminated by employers over the past 20 years. When these plans were the norm, however, the state retirement system certainly did not compare in benefits to private company plans.

Our elected officials have made choices knowing this day would arrive, and the bill would be due and payable. We now see that many of these choices were neither well thought out nor were they fiscally prudent. There is no doubt that changes must be made to the state retirement system. These changes, however, should not have an adverse effect on the lives of thousands of people who have served the public well for the better part of their lives.

We all must live with the choices we make, and state government has made some arguably bad ones. There was no outcry when these funds were used to support other programs in Maine, but now that it is time to pay, some will look for ways to “wiggle out.” My father used to say that a person is as good as their word. Our state should also be as good as its word and honor its promises — more importantly obligations — to its public servants.

Denis Cranson of Bangor is a social worker and teacher.

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