Judges pension plan underfunded by $53 million7/31/2013
DES MOINES – Gov. Terry Branstad’s veto to pump $18.9 million into Iowa’s judicial pension system left the plan with an unfunded liability of $53 million, according to figures from the Legislative Services Agency.
The pension plan, which covers judges and has 386 members, is currently funded at 69 percent. That means it doesn’t have the money to cover its obligations for retiring judges.
The fund lost $1.8 million in stock and bond investments during fiscal year 2012, which compares to a gain of $18.4 million the previous year, according to the state auditor’s office.
To help narrow the gap, employee contributions increased 1.4 percent, or $34,770. Employer contributions rose at the same rate, but cost taxpayers more than an additional $1 million. Beginning in July 2010, judges’ rates increased to 9.35 percent times the basic salary of judge. Judges earn an average of $134,167 a year, according to the legislative agency figures.
The state’s contribution, however, began to increase in 2008 by 30.6 percent of the basic salary and was supposed to jump by the same amount each year until the system was fully funded.
Branstad vetoed the increased contribution, which was passed by the Iowa House and Senate, saying he wanted to reform the pension system instead of throwing more money at it. The $18.9 million was meant to reduce the unfunded liabilities and improve the funded ratio of the system, the report said.
While the system lost money in investments, its benefits to members increased in fiscal year 2012 by $537,838.
Judges are eligible to retire at age 65 with a minimum of four years of service. They can also opt to retire at age 50 if they have accrued 20 or more years on the bench. Judges are required to retire at age 72 unless they apply to participate in the senior judge program, in which they receive a pension payment while still working.
The monthly benefit is based on their highest three years of pay and also factors in years of service and a 3.25 percent multiplier. The maximum benefit cannot exceed 65 percent of their base salary.