No one is taking away your IPERS

No, they’re not taking away your IPERS benefits.

That’s the most important thing anyone can take away from this column. IPERS is not on the chopping block, no matter who tries to convince you otherwise or how adamantly they insist.

In fact, lawmakers are not likely even to touch it.

The latest scare over the potential end of the Iowa Public Employees’ Retirement System happened earlier this month, after it was reported that the Iowa DOGE Task Force recommended replacing IPERS, a defined-benefit system, with a defined-contribution system for new employees similar to the 401(k) system commonly used in the private sector.

The Iowa DOGE Task Force, created through an executive order from Gov. Kim Reynolds earlier this year, is styled like the federal Department of Government Efficiency intended to identify and eliminate wasteful government spending. Iowa DOGE is aiming for improved state and local government efficiency. The suggestion to replace the current IPERS with a defined-contribution plan was one of 45 possible recommendations revealed.

No way, say legislators

Majority Republicans in the Iowa Legislature took to social media in droves to make known their refusal.

“I’m open to efficiency ideas, but moving new hires to 401(k)s raises big concerns about fairness, pay, and long-term funding,” wrote first-term Rep. Jason Gearhart, R-Strawberry Point, on Facebook. “I haven’t heard from a single colleague who wants to eliminate IPERS. I suggest continuing to let your legislators know where you stand on this issue, but I don't think it's time to hit the panic button.”

“ … I am firmly opposed to any effort to reduce, cut, or otherwise weasel out of these obligations. Honoring the state's IPERS obligations is non-negotiable as far as I'm concerned,” wrote State Rep. Charley Thomson, R-Charles City, on Aug. 8. Thomson, an attorney from Charles City, is co-chair of the Public Retirement Systems Committee, a permanent joint committee tasked with reviewing all public pension systems in Iowa.

“In the future,” Thomson added, “I think it would be better if we try to find efficiencies in government without suggesting (intentionally or not) that their IPERS benefits might be at risk.”

Republican leaders also chimed in. In a statement, Iowa Speaker of the House Pat Grassley said, “While I recognize concerns about IPERS, I want to reassure Iowans that I have no interest in making changes to it.”

Iowa Senate Majority Leader Jack Whitver cautioned that no legislative proposal to change IPERS even exists, and that no one from the Senate Republican caucus had approached him seeking to do so.

All this talk is for something that’s not even a legislative proposal. It’s not even an official recommendation yet. None of the 45 recommendations floated by the Iowa DOGE Task Force are official until task force members vote to finalize them next month. Those recommendations will be delivered to Gov. Reynolds at the end of September.

Changing IPERS too politically costly

Like everyone else, I’m on team “Don’t Change IPERS.” But not because I don’t think any improvements that could be made to the system — especially for the sake bringing taxpayer-funded IPERS on par with the private sector.

But as we see from the latest round of backlash, the general public in Iowa is not willing to lend a reasonable ear to consider those ideas. The mere mention of reforming IPERS suggests that any revamp would come at immense political cost.

And if that cost was the very balance of legislative power in Des Moines? Any adjustment to the program made at the suggestion of the DOGE task force might pale in comparison to later changes made by a new majority — one that likely wouldn’t stop at just repealing the DOGE-endorsed alterations.

Changing or replacing IPERS is simply not politically viable — for any person or party. Unless the ghost of Robert Ray enters the race to be our next governor, no one in the whole state has enough political capital to gamble on reforming IPERS.

Democrats see opportunity

It’s no coincidence that mere suggestion of reform (from people with absolutely no legislative power) has been seized upon by Iowa Democrats. Their future may look a bit brighter after a couple special election wins — including a (well-earned) victory Tuesday that cost Iowa Senate Republicans their supermajority — but Democrats need still all the political capital they can scrape together in order to compete in 2026.

And unlike “Trump is literally Hitler” and “Kim Reynolds wants to kill your kids,” which activate only the left wing’s most perfervid nutjobs, “You’re going to lose your IPERS” does get people’s attention. Republicans may have already made it clear that’s not going to happen, but context — or even simple truth — is apparently optional when fear can materialize into votes for Democrats.

Whether or not that fear is accurately informed, Iowans do themselves a disservice by letting their collective aversion to change prevent them from even hearing the Iowa DOGE Task Force out.

The idea to change public pension benefits going forward is not an idea suggested in bad faith. And Terry Lutz, the chair of the working group responsible for the recommendation, certainly wasn’t wrong when he said that Iowa’s public pension system is “way out of whack with the private sector.”

Public employees in Iowa contribute approximately 30% to their state retirement plan, according to Lutz. The state — aka the taxpayer — contributes the other 70%.

“In the private sector, these percentages would almost be the opposite of that,” said Lutz, who is also the chairman of an engineering firm and a former mayor of Fort Dodge.

IPERS was created in 1953 to attract and retain quality public workers. For regular members, the benefit is calculated based on a percentage of the average salary from the employee’s five highest-earning years, with a maximum benefit amount of 65% of an employee’s average salary for 35 years of service or more. Special service employees such as firefighters or deputy sheriffs earn higher percentages for shorter terms of service due to the demands of their professions.

Keep in mind that for many IPERS members, those salaries were negotiated through collective bargaining, a right afforded to units of public employees in which a majority wish to form a union. Collective bargaining was introduced over two decades after IPERS was created. Unlike in many comparable private-sector jobs, collective bargaining gives public employees the upper hand in negotiating the salaries that later determine their IPERS benefit amount.

That’s something to consider for those complaining that the task force recommending public-sector changes is made up of private-sector leaders, as was the case in a Facebook post on Aug. 9 by Leland Schipper, a former public school teacher who is now an associate principal in Des Moines. The post, which claimed that “the wrong people” were serving on task force and that it should “put an educator in the room,” has been shared over 6,100 times.

But in matters of salary — including retirement benefits — the public employee and the taxpayer-funded public employer collaborate as adversaries, not allies. Public employees are already represented in these matters — they have labor unions. One could say the Iowa DOGE Task Force is the representation for taxpayers, albeit representation that does not enjoy codification in Iowa law.

A key reason IPERS is so lucrative for public employees is that unlike a 401(k) in the private sector, IPERS retirement benefits are guaranteed for life.

That guarantee often enables a public employee to retire earlier than many private-sector employees. Even before they are eligible for Social Security benefits, an IPERS member can collect their full retirement benefit once their age and their number of service years add up to the number 88.

For example, a public school teacher who began their employment at age 23 could retire after 35 years at age 58. Because their combined age and length of service exceeds 88 years, that teacher would be entitled right away to start collecting their maximum benefit of 65% of their average salary. The teacher could continue to find work — even returning to a teaching position after a short period of separation known as the Bona Fide Retirement requirement — while collecting full IPERS benefits.

That’s a generous arrangement, one for which I certainly don’t fault IPERS members for wanting to keep. We all want our public employees to enjoy financial security in their retirement and are supportive of generous retirement benefits.

But one thing that can test that generosity is an IPERS member having a higher income in their retirement than they did as worker due to the amount of their IPERS benefit. That’s surprisingly common for public sector retirees who had long careers.

Unlike a 401(k)-style defined contribution plan, the taxpayer is on the hook for providing those (guaranteed) benefits and funding the office that manages them. Eighty-three percent of Iowa workers are employed in the private sector, and are already responsible for managing their own retirement benefits, for which contributions are often subtracted from the same paycheck from which the state grabs their taxes.

I do feel a bit of disappointment for the Iowa DOGE Task Force’s sake. It can’t be understated that they come to the table in good faith. Iowans should at least listen to what they would have to say — after all, it is Iowans whom they are there to serve.

Many Iowans won’t. Some are too scared. Others are too busy complaining that there aren’t enough good people to step forward and participate in politics.

I’ll end with a final reminder: No one is taking away your IPERS.

Comments: 319-398-8266; althea.cole@thegazette.com