Why Support A Broken Pension System?
A couple months ago, I wrote a piece that detailed a specific problem with the Public School Retirement System of Missouri (PSRS) — spiking of the final average salary. In my op-ed, I described how Terry Adams would gain an extra $15,000 a year for the rest of his life by simply working one extra year. Adams moved from his position as superintendent in Wentzville to the interim superintendent gig in the Rockwood School District with a significant pay raise.
My op-ed has received some pushback from individuals, typically PSRS retirees, who believe it was an unwarranted attack on the “good work” of PSRS. Most recently, a retired teacher wrote in Mid Rivers Newsmagazine that “we should all be working to support the [PSRS retirement] plan.”
The example I provided illustrates how pension systems can be gamed. The response in Mid Rivers Newsmagazine correctly mentions that measures have been put in place to prevent salary spiking. Within the three years used to calculate a PSRS member’s final average salary, the retirement plan places a 10 percent “cap or limits on increases in salary during the period that is used to calculate your Final Average Salary.”
This cap is like putting a Band-Aid on a mortal wound. The cap does little to help the situation for one obvious reason — it does not apply when an individual changes jobs. For instance, when Adams switched from one district to another, the cap did not apply. Similarly, when a teacher switches to a principal job within a district, the cap will not apply. The cap only applies for an individual staying in the same job. Moreover, it does not prevent spikes occurring in the year before the three final years. It simply does not fix the fundamental problem that Missouri’s defined benefit pension plans are not directly tied to an employee’s contributions.
I’m sorry, but it makes little sense to support a plan that is fundamentally broken and needs reform. Missourians should not simply ignore these problems and “support the plan.” Missourians should improve the plan.