Minnesota must reform retirement payout method
At least 15 states have put in place “anti-spiking” provisions that prohibit overtime from being included in final salary calculations in retirement plans for local government workers. Minnesota needs to beef up its laws.
The state’s largest public pension system is probing how widespread spiking is among government workers. A report is expected by Dec. 12.
The issue came up after the St. Paul Pioneer Press examined “spiking”?on the St. Paul Fire Department, where some supervisors boosted their final average salaries through massive amounts of overtime. Their goal was to boost retirement payouts, which are calculated, in part, by using workers’ “high five” salaries. The system does not separate overtime from regular pay.
The Public Employees Retirement Association, or PERA, affects taxpayers because local governments contribute to the system. It is not currently clear whether “spiking” is taking place more broadly.
Clearly, taxpayers need to know. And any spiking needs to be stopped by changing the way retirement payouts are figured.