Nevada Public Employees' Retirement System, Carson City, would pay $1.2 billion more over the next two fiscal years than its current obligation to retirees to convert its $24.7 billion plan to one based on employee contributions, according to a new report. That's because switching to a defined contribution plan would speed up the need for state payments to cover existing benefits, according to the report by Segal Co. that was presented Dec. 15.
Gov.-elect Brian Sandoval has pushed for an employee-supported plan to cut costs for the fund, which has $10.4 billion less than needed to pay benefits, documents for a state bond sale this month show.
“We know there are no short-term savings,” said Dana Bilyeu, the system's executive officer. “In fact, there is a short-term higher cost.”
Conversion to a DC plan can create additional costs because of the need to fund and administer two sets of benefits at once during the transition, the Segal report said.
As of June 30, the Nevada system was 70.5% funded, down from 72.5% a year earlier, according to the bond documents.