Reality Check: Pensions For MN, WI State Workers

By Pat Kessler, WCCO-TV

— Minnesota public workers already pay more for their pensions than public workers in Wisconsin.

IN FACT, Wisconsin public employees pay nothing for their retirement now.

Gov. Scott Walker wants them to pay 6 percent.

Minnesota public workers already pay 5.8 percent.

By comparison, the average 401k contribution last year was about 8 percent.

However, that’s NOT THE WHOLE STORY.

Public workers like teachers, cops and snowplow drivers aren’t getting rich working or retiring.

The average state worker in Wisconsin makes about $54,000 ($53,703) with a pension of $24,500.

Minnesota public workers average about $57,000. ($56,866) and get a $26,000 pension.

Here’s what you NEED TO KNOW.

Last year, Minnesota public employees took pension cuts to stabilize the fund.

Unlike Wisconsin, Minnesota retirees don’t get state health care benefits.

And Minnesota’s public workforce is among the smallest in the nation: tied with Florida at No. 40.

That’s Reality Check.

More from Pat Kessler
  • Fed Up

    While that may be true, check the retirement age of those people and you’ll find that taxpayers are paying that 26k average per year for many, many years. You also failed to mention the “double dipping” that goes on where some workers retire from one public position, take another and draw two or more pensions at the same time. Not to mention Social Security which by the way, everyone today is receiving more in benefits than what they put in.

    There are many of us that work and earn similar dollars but don’t get the benefit of any pension. So yes, public workers do earn more than the public sector when you look at the entire compensation package.

    • Clarence

      I agree with you 100%! It’s about padding the pockets of the “fat-cat” union leaders and funneling the money back to the democrats and not about the well being of the average worker at all!! Here’s a ‘REALITY CHECK” for cbs and their liberal cronies- quit lying to us and stealing from us via your phony “union dues” & taxes!!

      • Saywhat?

        So there’s no republicans working in the unions or benefiting from this?

      • Jeff

        I am a public worker who does not pay into social security because of a state retirement plan that I am mandated to pay into. The social security tax rate for employees for 2012 is 4.2%. My contributions for the state pension plan that I have no choice but to pay into is 9.6%, more than twice the rate that private sector employees pay into social security. I worked a second job in the private sector for several years from which I did pay into social security and technically have earned a social security pension; however, unlike in the private sector where I could have as many jobs as I want paying in to social security only to collect from them later when I retire, I will never see a dollar in social security benefits. Because of the Windfall and Government Pension Offset provisions of social security, when I do retire from public service, my social security pension will be reduced dollar for dollar up to 50% of my public pension. That means that even though I paid into social security for years, I will lose all my social security benefits. I am very tired of the uninformed arguments people make regarding “over paid public employees”. The reality is that my mandated pension costs me more than twice what private sector employees’ mandated pension (social security) costs them, and even though I have earned a social security pension, I will lose it only because I am a public employee.

    • Ripples07

      Don’t you have to work a job for a period of time before you can collect a pension? The state does offer a post retirement option for retirees in which they get paid a much lower wage than before they retired, part-time with NO benefits and they state gets the benefits of their knowledge and experience cheap. The person DOES NOT pay into a pension and gets no additional pension when they leave. sheesh I get tired of non-public employees thinking the grass is always greener. If it is so great and you are so much smarter then government employees, why aren’t you working for the government!?!

      • Not quite true...

        Public employees are not eligible for social security because of their pensions. If they get anything at all, it would be about $100 per month, and that would only be because of other non-public employee jobs that they had. The misinformation in these comments is really sad!

      • PAUL

        Not quite true… public employees pay into social security so they are eligable to collect social security as well as there pension….if we wern’t eligable to collect social security they couldn’t take it out of our checks

    • jimmy

      Fed up said “There are many of us that work and earn similar dollars but don’t get the benefit of any pension.”
      Oh boy here’s another one that will be on welefare when he gets old.

    • Wesly

      1. Rule of 90 has changed so your point in the future will be moot.
      2. That others do not have pensions is not the fault of the state worker or others with pensions. You may earn similar dollars, but is it similar work?

    • Irv

      If I work for a company like IBM, Mayo, or 3M I make much more than any state worker and have a better pension. If you don’t like your employer than find a better one. Thats what a conservative told me. I don’t make near what the public worker with my education makes.

    • Dennis

      Under the Windfall Elimination Provision of the Social Security Administration, the police do not get any benifits from Social Security upon retirement.
      If they work in a civilian job before or after law enforcement, they can accrue SS Benifits. However, the police are penalized 66 percent of their due benifit because of their police pension. On average, a retired officer receives about $100 a month in SS benifits a month.

    • Sandy

      That is not true, if you were hired BEFORE JULY 1, 1989, (23 years ago) you could retire with a full pension under the rule of 90 (age + years of service) but since that time, full pensions are ONLY after age 66 (gee, that’s SS age same as everyone else). So please don’t continue the lies.

  • compare apples to apples

    However, if you take into account amount of education and compare with private sector, the public employees get paid less.

    • Not comparing

      That is a lie! public employees get paid more for the same job in the private sector.Tthat is if you can compare jobs. The reality is that the public sector provides no real income to the economy. they are paid by taxes and even if their wages are factored in the result is that a public employee is nothing but a leach.

      • Nica

        A leach? Do you use the roads they plow an maintain? Is that a service you need or can you make it to your private sector job without their service? Are you home schooling your children (my guess is based upon your intelligent post the answer is no!)

      • Dawn Syverson

        I worked as a public employee for 20 years and I do think that at the lower levels, the pay is very good, however, the more education and experience you get the less competitive the jobs are with the private sector. The unions expect that everyone in the system is to be treated exactly the same regardless of experience, motivation, education, etc. My experience with the union was always that they tried to maintain everyone at an equal level and since they can’t bring up the motivation, quality, etc. of those less motivated, talented, whatever.. they try to bring down the one’s that are all of these things. Therefore, quality workers don’t stay long in a lot of the jobs. This leaves the quality people who remain to pick up the pieces for those who aren’t quality workers and they get overworked and taken for granted as a result. I was a manger for ten years in this system and lost a lot of talent to the private sector for pay and benefit reasons. I also did a study of my staff salaries to the private sector and out of 23 people only two were at the mean salary for jobs in the private sector for the same work. Not one was above – the rest were below. As a manager, I don’t think most of them were worth more than mean, but there were some who were and I wasn’t able to even keep them.

      • Get the facts

        Wow, I work hard, am a public employee and guarantee you I am not getting rich. I am thankful I have a job that can help support my family but think you are being very ignorant if you think we all make more than the private sector. I have had the same job for 13 years and over those years am lucky if I have had a 5% cumulative raise. I have 3 friends who do similar work in the private sector… Over the years they have gotten great Christmas bonuses, raises, tickets to professional sporting events, etc…I got nothing. I’m not complaining but feel like people such as yourself are misinformed.

      • william

        I am familiar with two professions, nursing and civil engineering. Both are paid far less than private practice. Where do you get your fact from. I agree with Nica

      • PAUL

        Not comparing you have NO CLUE………….we live in the communities we work in we buy food,gas, homes ,cars, pay property taxes, searve on PTA,city councils,county boards, support schools,churches etc. etc. etc. etc so YES We do provide into the ecnomy just like everyone else in the communities that we live in

      • TAKE

        So public employees offer no services that you take advantage of? You don’t drive on roads, your children don’t go to public schools, you don’t use parks………? Hopefully you will never need a police officer or fire fighter. Oh and by the way public employees pay taxes just like private sector employees and guess what they also spend money puting revenue back into the community. State workers pay into their pension plan, pay for their insurance and have had their wages frozen for the last 5-6 years (don’t remember exactly when this went into effect)

  • steve

    mmmm, get a education , dont do drugs and go get a goverment job and stop crying

  • Nica

    If there are former public employees who draw on two pensions I would think they would be in the vast minority.
    What is the average age of retirement for a public employee? I would be curious to know just how many people are living for many, many years on $26,000 a year. It sure doesn’t sound like my idea of retirement.

  • barfoo

    Oh boo hoo. It’s a decent job with a pension. You got a crummy job and get nothing from your employer. Poor baby!

    • Lola Falana

      Yes, I always detect bitterness from those that gripe about what the public employees get. Public employees do work, they do contribute to the economy and they don’t get out of paying taxes so in a sense, they are paying a part of their own salary.

      • Not comparing

        Again, nice try. Public employees provide nothing to the economy but cause working people to pay for what is simply a waste of money.

      • Lola

        Contribute nothing to the economy? Well, I live on planet Earth and public employees do contribute. They own homes, rent apts., buy cars, groceries, merchandise. Your planet sounds very interesting, though.

      • lib

        Tax payers pay their salary.

      • Not comparing either

        Provide nothing for the economy? They educate the next generation, provide safety for you to get to work, are willing to charge into your burning house to save your family, not to mention the taxes they pay, the food they buy, the house they own and the time they volunteer. If you want to see how little public employees contribute to the economy go to western MN to a town whose school has been closed down. See how thriving thses towns are.

      • Ralph

        @ not comparing. In your world is there no needs for a police or fireman? To drive down a road?Are there no children to educate? Are there no criminals?

      • Seen both sides

        Lib, Why do you think public employees don’t pay taxes too? We basically pay ourselves–I’m guessing if you had to that, you be the loudest whiner. I worked in the private sector for 21 years and paid into social security. I then got a job in the public sector, I make less, but at first the benefits were good. Now not so much. I won’t see a penny of what I paid into social security because of my public pension. Get over yourself and quit spreading lies.

  • ????

    Were coming for the minnesota unions next

    • PAUL

      bring it on atleast we have a GOV who will stand up for the worker unlike wi gov scott (i quit college and iwork for the koch brothers) walker

  • brose

    Do state retirees get pension increases every year?

    • PAUL

      only if the trust fund that the pensions are in make money, sometimes my mother who is a retired state employee gets a modest increase but not always

  • bml

    Ok, here’s the scoop. Let’s get correct information out to everyone so we all have the correct understanding. Years ago state employees had what was called rule of 90. Yes, a lot of those people were able to retire early and start drawing their pension (there are very few left in the state anymore as this was changed I believe in the early 90s). However, as health benefits, Medicaid, etc have changed, so has retiring. Many state employees no longer retire early because they would have to pay for their own healthcare for many years. So, they work until their full retirement age so they can go on Medicaid.

    Double dipping is a big complicated. I don’t know how it was done in the past so I can’t say it didn’t happen. However, what I do know now is that I, personally, will be drawing from two pension funds. HOWEVER, this does not mean I get two full checks. I get a percentage of my total pulled from the separate funds. So together, the two checks I will receive make the whole. I repeat, this is not a double pension I receive. I receive one total, it’s just separated and paid out of two different funds. It doesn’t change whether I draw from two sources or one.

    Last, I want to make a point about pay. I agree with both sides. There are positions in the state that are overpaid. These tend to be concentrated in two areas….. support staff that have been there for 30+ years and upper management. Yes, these areas can be slimmed down. HOWEVER, there are many positions that are underpaid. My specific position, related to accounting and auditing, is paid on average $10-15 grand less than I would receive in the private sector. It’s all a trade off for me. I get paid less now than I would in the private sector but in return I receive a pension check when I’m done. Not an over the top pension, but something that will cover my bills and be ok. I could probably save more working in the private sector, invest it myself, and have a huge 401K when I retire if I chose to go private. But I’m at more risk to the economy then. The benefit of a pension is that it absorbs some of that risk. Again, that’s the trade off I’ve chosen, less money now for a bit more security later.

    Someone asked if there were automatic raises to pension checks every year. No, they are not automatic. However, the pension funds in MN have chosen to give raises most, if not all years. They were especially large raises during the boom years in the late 90s. This was probably poor planning on their part. They DO have the ability to not give raises and I think that would be a wise decision at this point.

    All I’m saying people, is that it’s give and take for all of us. Are there places to slim government? By all means yes. But if you truly think every state employee is living the high life on you then I’m very sorry you have that viewpoint, because I can attest that I am not and neither are many of my co-workers.

    Thank you to those who choose to read this and the other posts with open minds. I appreciate those who can objectively analyze the situation and who don’t automatically jump to conclusions or spew insults. And for the record, to be clear, that’s not aimed at any particular party, as both good and bad come from all parties.

    • Nica

      Wow – an intelligent and calm post. Thanks!

    • Jones

      Very nicely said! As a former State employee, I too had many family and friends comment/assume that I had great benefits. In reality, my benefits were equal to (and less in some respects) to the private sector job I left to become a state employee. There is definitely a misconception about what state employees and their benefits are really about. And just like there being good and bad in both parties, there are good and bad workers in both private and state employment.

      • brose

        I asked about yearly increases in public employee pensions , because being a retired person of 23 years I received only one increase in that time from the largest electric utility in the state.

    • yep

      Wow bml..perfect, very well said. I have a lot of respect for intelligent people like yourself. Hopefully someday more of society can be open minded and realize that it’s not always…ALL state workers, and ALL democrats/republicans..etc.

    • skicat

      I always love the term I could make more in the private sector…really…….well most that have triedhave failed in the private sector or go for the security of the public sector…ever try and fire an incompetent gov’t worker? Not going to happen… I don’t buy it And this stuff about the dedication and public sacrafice…keep telling it to the kids because they still believe it

  • Mike

    What do lawyers produce for the economy? Bankers? Doctors? They are all service industries.
    “Employees covered by the General Plan also contribute to Social Security. Monthly benefits from the plan are paid in addition to Social Security benefits.”
    “The law provides for an annual retirement benefit increase.” Max 2%. Doesn’t mean they’ll automatically get it. Depends on Wall Street and what the investment returns are.
    Current retirement age for people born 1960 and later is 67.
    Engineers with 30 yrs of service would get $35,000 retirement
    Snow Plow drivers with 30 years would get $18,000 yr.
    Right now there is an early retirement incentive for employees 55 and older. Which is up 24 months state paid premiums into a HCSP.
    If public employees are a waste, then you don’t mind a gas station saying 3/4 gal of gas is 1 gal. Your home needs a new septic system and no one inspected that it was installed correctly. Store selling tainted milk to your children.

  • Todd

    Minneapolis property taxes jumped 18% this year largely from three major pension fund that are closed. While people are struggling with lower home values and the credit crunch, they have to deal with these inflexible funds that are bleeding the budgets. Minneapolis Fire, Minneapolis Police, and Minneapolis Employee Retirement. (this is from a notice sent from Minneapolis in our estimated taxes letter)

    • Ralph

      Not 100% correct. With decreased state aid the counties and cities have to increase taxes. Aid to cities was increased in the Ventura administration to try to hold the line on property taxes. Had he not advocated for that your property taxes would have went up more in the late 90’s thus less now. Inflexible funds were a bad idea then, bad idea now. Sadly it is an agreement in place started by people who are probably deceased.

  • khinmn59

    Very few are claiming that public employees are getting rich…that being said, most will be eligible to recieve a pension. and if you work in WI you don’t have to contribute anything towards that? How many private sector employees have the opportunity to receive a pension? And to receive matching funds for a 401 you need to contribute part of your income towards that…it’s not just given to an employee. What percentage of the average private sector employee’s income goes toward health insurance? 15%…20%? and public employees are griping because they will be asked to contribute something towards their insurance? Give me a break! Everyone is struggling in this economy…People get real!

    • Wesly

      If workers unionized and bargained you would have it. The pie that any company gives workers is only so big. With a slice taken out for pensions other areas get less. Perhaps why many jobs don’t offer is the shortsightedness of the worker trying to earn a big pile and they don’t put any away.

  • Borderline

    Excellent and accurate comment by bml above. I have worked as a manager and supervisor in both the private and public sectors in the same field. His statement is accurate. I encountered difficulty attracting professional talent for a public job as the pay scale is substantially less. I generally sold job security, somewhat better benefits, and the “mission” aspect of the job to compete for talent. State admin/secretarial jobs are somewhat overpaid compared to the private sector and AFSCME rigorously protects those jobs. One other thing. All the excitement over the impact of public employee costs on the budget is a red herring. The entire cost of running Minnesota state govt – salaries, expenses, buildings, facilities – is 1.8% of the total state budget. You could lay off every state employee in Minnesota and close down all of gov’t and this would trim off 10% of the current deficit. This doesn’t mean that we don’t look for efficiencies and cut where we need to, but sooner or later, the cuts will have to come from health (push grandma out of the nursing home), education (tuition goes way up, or class sizes go to 50 kids), or local gov’t aid (less police and fire protection). I just hope that we have an honest debate about where the cuts really have to come from soon. Most politicians are inherently dishonest and don’t want to tell the public the hard truths. My personal belief is that, sooner or later, tax increases will have to come into the mix. It’s all about “who’s ox is getting gored.”

    • ohoh

      thank you for a well written letter on your own personal life, however, my cousin worked for the state park service and retired at 58 with 75% of his pay, with raises for life, along with full health benis for life. Also if it takes 15,000 t 20,000 per year per child for them to go to public school, where is all that money going?

    • paab

      well gee wilikers, the State is the largest employer in the Sate, if you are only 1.8 % of the budget where the helll is all the money going?

      • Borderline is right

        Welfare. Roads. Politicians. Schools. Universities. Stadiums. State owned buidlings–i.e. the Capital and adjacent buildings. The list goes on and on if you take the time to look at it. Employee wages and benefits are a SMALL part of where your money goes. The saddest part here is that you’ve obviosuly never taken the time to look at the entire State budget, yet you take the time to complain about it.

  • 1mistake

    The State of Minnesota currently has over 200 job openings, many for entry level positions. If the benefits and pensions are so great, feel free to apply.

  • skicat

    Nice snow job Pat….this is reality check? to compare us to Wisconsin..both State are broke only our Governor is bought and paid for by the Public Unions

    No talk of years of pension..retirement year..Cadillac health care..sick days personal days..or work week
    CCO better stick to weather and twins and they can’t even be unbiased about that

    • Dawn Syverson

      I’d really like to see some actual data on some of this stuff. Anyone know where some exists? I just started working in the public sector and my benefits are good. I’m sure I am very lucky in this respect, but what does it look like at other organizations? Obviously if you work for a large corporation they can afford better benefits. Are we going to start saying that these companies shouldn’t pay their people decent benefits too just because everyone isn’t equal?

      I do agree with the comment about sick days though. That is a serious issue within the state system if you ask me. I saw a ton of sick leave abuse in my 20 years of state service and a lot of it was by the union leadership. I barely ever took sick leave and even returned vacation time back to the state because I couldn’t take that much time off, but I knew a lot of people who didn’t have the same work ethic and it was disgusting.

      There definitely is room for improvement in a lot of areas but please stop bashing people just because you don’t have something they have. That is disgusting too.

    • Dawn Syverson

      I’d really like to see some actual data on some of this stuff. Anyone know where some exists? I just started working in the public sector and my benefits are good. I’m sure I am very lucky in this respect, but what does it look like at other organizations? Obviously if you work for a large corporation they can afford better benefits. Are we going to start saying that these companies shouldn’t pay their people decent benefits too just because everyone isn’t equal?

      I do agree with the comment about sick days though. That is a serious issue within the state system if you ask me. I saw a ton of sick leave abuse in my 20 years of state service and a lot of it was by the union leadership. I barely ever took sick leave and even returned vacation time back to the state because I couldn’t take that much time off, but I knew a lot of people who didn’t have the same work ethic and it was disgusting.

      There definitely is room for improvement. I just think the state worker bashing shouldn’t be such a popular sport.

    • TAKE

      Wisconsin Gov. is bought and paid for by the Koch brothers and he didn’t take office with a huge budget deficit he did that all on his own by cutting taxes to the rich and to corporations. State workers don’t have Cadillac health care they pay premiums, co-pays, deductibles and have to only see doctors within their network. In fact my kids aren’t covered when they are out of state at college under my spouse’s state plan. I work for a private company and I get paid days off and a decent work week. in fact most people get these benefits because of the work done by unions. I agree that there are reforms needed for unions but abolishing them completely is not a good idea IMHO.

  • John

    bml, great comments. On a more general note, there are good and bad employees at every job and every sector. Everyone can throw out all the examples you want, but what is the solution?  Something has to give. Do the unions want to keep all their jobs – then there needs to be cutbacks. Or if they don’t want cutbacks, then jobs need to be eliminated.  Probably a mix of both is a good bet. It is all cyclical. Guess what, the same issues will come up in 15, 30, 45 years, etc.
    I’m not sure why public setiment is so against unions. Clearly there is an image issue, one which was not improved based on the actions over the last few weeks.
    There is also the law of unintended consequences. There is nothing to tie this back directly, but when Obama passed universal health care that most citizens were against, he created a new group of anti-govm’t followers.
    This may have aided in Walker getting elected. I believe Walker also ran on this platform, so he is now doing what he said he would do on the campaign trail. 

    Granted, Walker could have handled this better. So could have Obama. The consequences for Walker are to be determined.

    • Mike

      Good comment. Us union employees want to protect our job. Who doesn’t want to protect their job? I agree some cuts do need to be made but from where? There are 11 or 12 bargining units (unions) n the state and each wants to keep their members. Right now in the state there are positions on the books, but are currently unfilled. When they cut they try to cut these permamently or take postions thru retirement/early retirement first. Some are filled, some are held empty until times get better and others are cut outright.
      I also don’t like Obamacare, but something needs to be done. Take away the Bachmanns and Frankens and have the moderates hammer something out.

  • Anna

    A Wisconsin friend recently posted on facebook this article written by Rick Ungar: (His posting from Feb 25.) It points out that Wisconsin state employees’ contribution to their pension is actually through deferred compensation which was agreed upon through collective bargaining.

    • Dawn Syverson

      It actually works like this:
      – the state contributes a portion of your income to a pension plan (4% in MN).
      – the state takes a portion of your income out of your check and puts it in a pension plan (4% in MN).
      – they the employee has an option to contribute more of their own salary (before tax) to a deferred compensation plan. This plan is very much like a 401k in that it is market dependent, etc.

      The difference between a pension plan and a 401 or 403k is that the pension is a guaranteed amount when you retire. The 401 or 403k can fluctuate with the market. Because the money has to be available at the time of retirement, the state can’t play with it as much and it has to stay fully funded by law. That means if the state losses money on the pension plan, they have to make it up and refund the amount at some point.

      In truth, the state employees pay for half of their pension out of their salaries (and if you are counting deferred comp it is more). The issue really is the cost to the state to fund the plan over the long-haul when the market is going up and down. If I had put my 4% in a 401k instead of state pension (which was NOT an option by the way – AND we can’t contribute more than 4% either). I may have lost more money in the market, but my money was secured by the need for the state to fund the pension at a set amount. I also didn’t gain as much on my money during the good times. I did, however, lose money in my deferred comp just like everyone else.

  • Murph

    Clearly the GOP is playing to the small minded rednecks who can’t figure out the scheme or it’s ultimate goals.The super rich are just trying to get an ever growing piece of the pie.They think that they are better than everyone else.They are the ones who hire illegals and treat them like slaves Many of you hate filled non unionized and those soon to be non unionized will wake up far, far too late to live in anything approaching comfort.So go tune in to Glen Beck and all the other puppets.Dreamers!

  • Jeff

    All you see in the news anymore is how the house and senate want to make change in the pay and benefits for state employee. From what I know when they make a new rule for state employees they are excluded from have their pay or benefits changed. Is the house and senates pay & benefit package above the private sector? Are they not state employees?

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  • denise

    How are the Koch bros. paying? Are they pretty rich? Do your wages stagnate while theirs increase exponentially? Who pays proportionally more taxes, you or the Koch bros? If you are so poor that you complain about teachers and firemen pay, maybe you are the one who needs a union.

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