I attended the Benefits Advisory Committee meeting on Monday, January 24th in my role as the alternate to the committee for the IPERS Improvement Association. The letter below from Mr. Gary Thelen is an accurate description of the discussion and action that took place at the meeting. He does add some information like the number of voters in the letter that I can’t verify as accurate but the information about the fund balance, House Study Bill 581 (now named House File 2171), and raising the earning limits are right on.
Steve Williams
Vice-President of the IPERS Improvement Association
Dear IPERS Members and Other Interested Parties:
Today, Monday, Jan. 24, 2022, the Benefits Advisory Committee of IPERS met via a virtual meeting via telephone. I, a private citizen and IPERS member, attended.
The good news is that the IPERS fund is worth $43.3 billion as of Friday, Jan. 21. That is twice what it was worth when I retired 20 years ago. That is very good news! It keeps the politicians at bay!
What action towards IPERS will the legislature take? IPERS is always fair game in the second session of a General Assembly.
First of all, there is no talk of changing the fund to a defined contribution plan (bad for members). Gov. Reynolds came out in favor of that during her last campaign. I personally heard her say that! No bills have been introduced to do so. Why? It would not be popular and she wants to get reelected! There are 170,000 Iowans who are actively contributing to the fund right now. There are 126,000 members who are receiving benefits. That's a total of 296,000 voters who have a vested interest in IPERS. On can easily double that figure since each member of IPERS has a spouse, significant other or interested family members who want to see the fund remain as a defined benefit plan. In round numbers, that is a voting block of easily 600,000 voters or about one third of 1,656,733 voters who cast a ballot in the 2020 presidential election! That is a significant voting block!
A bill has been introduced in the Senate that would prohibit IPERS from investing in China. That is not likely to go anywhere. Many years ago, some legislators wanted to force IPERS to invest only in Iowa companies. The sponsors of that bill did not get reelected!
House Study Bill 581 (now named House File 2171) has been introduced and is under consideration. It would eliminate the Iowa income tax on pensions. Many states have adopted this measure. Retired Iowans already are exempt from paying state income tax on their Social Security benefits. I was working as a floor clerk in the Iowa House in 2006 when this measure was adopted. However, the State of Iowa did not have a lot of money then and it was phased in over an eight year period. This bill will probably pass but who knows what the final law will look like?
The IPERS administration wants to change some regulations about the reemployment of members after retirement. If a member retires before age 65, s/he must wait four months before being eligible for reemployment in an IPERS covered job, such as substitute teaching. The maximum s/he can earn is $30,000 per year. Any more than that and part of one's pension must be returned to the state. This has been in effect since 2001 and needs to be updated if only to help alleviate the teacher shortage. If a current retired teacher (or other state employee) earns more than $30,000 at an IPERS covered job, then half the overage must be returned to the IPERS fund. This does not apply to retirees over 65 years of age. There is no income limit for them. The IPERS management proposes raising the limit to $50,000 and eliminating the four month waiting period. This will require an act of the Legislature. Last year IPERS collected about a million dollars in excess earnings.
Continual vigilance is required to make sure that greedy politicians with sticky fingers don't try to take money out of the fund. The last time that happened, it was one of our own, Gov. Chet Culver, a former DMPS teacher, who wanted to use IPERS funds to repair roads. He didn't get reelected!
Gary Thelen
Legislation Observer
Des Moines Area Retired School Personnel Assoc.