The state's employee retirement system is facing a potential $16 billion shortfall in coming years as baby boomers continue to retire and may have to scale back the program for future state employees, the program's director told lawmakers Tuesday.
Officials say they may have to change the program so it can continue paying full benefits in the future for the 70,000 state employees in the system and the 32,000 retirees already receiving benefits. The retirement system board approved a reduced cost-of-living increase last week.
The talk of any cutbacks has retirees up in arms. Some fear the benefit will be eliminated or slashed for future employees. They also worry their annual cost-of-living increases will be cut further.
The problem is similar to what's ahead for Social Security at the federal level. The ratio of workers paying into the system to retirees receiving benefits will be shrinking, officials said.
"Our liabilities are growing faster than our assets," said Michael Nehf, executive director of the state's Employees Retirement System, in a presentation to a House-Senate panel studying the issue Tuesday.
Nehf said the state has several options beyond eliminating cost of living increases, which at 3 percent would have cost the system $250 million this year.
He said the state could also increase contributions from employees or the state treasury to help bolster the fund. And lawmakers are pushing bills, with the blessing of the Perdue administration that could change the plan for new state employees. They would either have less of a standard pension-type package or start getting money from the state to put into retirement accounts.
Wednesday, October 24, 2007
Georgia State Retirement System Facing Crippling Shortfall
Looming deficit threatens to tarnish the golden years of thousands of Georgia state employees. With fewer workers paying into the system, officials say benefits might need to be scaled back.