The ERS board voted Thursday to give the former state workers two 3% bonus checks, capped at a total of $1,800 for ex-staffers with pensions at or above $30,000. Retirees have received similar bonuses in recent years. The checks generally go out in January and July.
While bonus checks are nice, ex-employees have been pushing hard for years to get the board to approve COLAs because they are permanently built into their pensions. Bonus checks, meanwhile, require a board vote every year.
“Retired state employees in the Georgia State Retirees Association are thankful for the ERS board’s granting the two noncompounded payments for next fiscal year, especially since the inflation rate is rising faster this year,” said Jim Sommerville, president of the Georgia State Retirees Association. “However, we cannot help but to be disappointed that the board chose once again to not grant a full cost-of-living adjustment when conditions so favor it.”
Sommerville noted the investment growth this year, improving state tax revenue and the $4.7 billion the state is expected to receive from the latest federal stimulus package.
“Including the rising cost of medical services as individuals age, retirees’ cost of living has increased by upward of 30% since we last received a COLA in 2009,” he said. “More than half of almost 54,000 ERS retirees continue to receive less than $22,000 annually. Many retirees are now struggling to keep pace with rising expenses.”
Retired employees have said they feel mistreated by the annual decision not to provide cost-of-living adjustments. They note that retired teachers receive 3% annual increases to their pensions.
The difference is significant. A $30,000-a-year pension in 2009 would be worth more than $44,000 next year if ex-state workers had received the same COLA as Georgia’s retired educators.
The Georgia State Retirees Association, which represents state pensioners, has unsuccessfully lobbied the General Assembly to include money in the budget to jump-start the COLAs that retirees had received for decades before the late 2000s.
Much of private industry long ago eliminated pensions for workers, but they’ve long been seen as an important recruitment and retention tool for governments such as the state of Georgia. Supporters say the guarantee of a monthly check upon retirement makes up for years of working jobs that often pay less than similar ones in private industry.
The state has several pension systems, but the two biggest are the ERS and the Teachers Retirement System. Combined, they have more than $100 billion in assets.
As in any pension system, the payouts that former state staffers receive vary, based on their length of service and top salaries while on the job. Lower-paid workers, such as prison guards, receive much smaller pensions than somebody who retired after running a state agency and was making a big salary.
Pensioners can also receive Social Security.
While some former employees receive six-figure pensions, ex-state patrolmen, agricultural inspectors, staff secretaries and child welfare workers are more likely to receive payouts in the range of $15,000 to $30,000 a year.
For decades, Georgia granted COLAs to state retirees.
The situation for ERS retirees changed in the late 2000s, when concerns were raised that the system was unsustainable. The ERS director in 2007 told lawmakers the system faced a potential $16 billion shortfall in coming years as baby boomers continued to retire. Investment returns during the Great Recession additionally strained the system’s finances.
Lawmakers agreed to change it so that new employees received a lower pension and a 401(k)-type retirement plan. A vast majority of new staffers don’t stay long enough to vest and receive the full benefits of the plan.