You may be aware that some retired government employees in Oklahoma (including politicians) are cashing fat retirement checks—with some retirees taking home more each year than they paid in to the system during their entire careers.
These egregious examples aren’t the only indicators that Oklahoma’s pension system needs work. Even after the pension reforms of 2011, OCPA’s economists pointed out that further reforms are needed to put Oklahoma’s pension systems on a sustainable path. They recommended (1) replacing the current defined-benefit system with a defined-contribution system for new hires, and (2) right-sizing Oklahoma’s bloated government workforce.
In a forthcoming article, OCPA research fellow Matt Mayer will examine the unfairness of a system wherein Oklahoma’s government workers get an astonishing return on investment while Oklahoma taxpayers get stuck with the bill. For example,
Under the 80 points rule (if you joined the pension before July 1, 1992), if you retired at age 52 after 30 years as a high-level state worker and had a final average salary of $100,000, you would receive a $5,000 monthly pension payment in your first year of retirement. If you were a private-sector Oklahoman, to retire at age 52 with a $60,000 per year benefit, you would need to have more than $1.2 million in the bank. To put this figure in perspective, the Employee Benefit Research Institute reports that the average 401(k) balance for Americans is roughly $60,000, which means our Oklahoma government worker gets a pension in one year equal to the entire average retirement account of private-sector Americans.
A new pension calculator (CalculateYourPublicPension.com/OK) shows just how good Oklahoma’s government workers have it. Here’s hoping that Oklahoma’s political leaders can summon the courage of Gov. Scott Walker—and soon.