RENO, Nev. (KRNV & MyNews4.com) - Dan Pellisser always dreamed of retiring from public service to spend time with his family at a house on the river, and when he heard about a financial investment opportunity to help with that called "airtime," he jumped at the chance to buy in.
“It was just a tremendous opportunity, anybody who knows numbers said oh my gosh, they are giving away the store,” Pellisser said.
Airtime allows public workers in some states like Nevada and California to beef up their resume by paying a little money up front. That adds years of additional service credits - thus increasing their pension amounts. Dan for example says he paid $75,000 to add five years. That gets his pension 10 percent more annually of his final salary when he retires. For him, it's about $13,000 additional each year - meaning Dan will make-up that money that he paid in less than six years.
If Dan lives to the average age of male in the US, that's more than $375 thousand dollars extra in pension pay outs. Subtract his original payment, and tax payers are covering $300,000 based on work Dan never actually did for them.
“This isn't a fair deal, the tax payers aren't being a fair employer. They are kinda being the chump employer,” Pellisser said.
The head of the Public Employees Retirement System in Nevada would not do an on-camera interview. But she did sit down with News 4 to answer a few questions.
"Some people are going to be big winners in this," PERS head Dana Bilyeu said. "But we're a plan of a hundred thousand people. The idea is to over the life and totality of the program capture the cost."
The director says they don't keep records of how many people have bought airtime, however she'd guess it's not a lot because the purchase isn't cheap. The plan also gets more expensive the older and closer to retirement you get: take a teacher in Nevada making $40,000 a year. At age 30 they would pay $6,840 for one year worth of service credits. But a teacher making the same salary at age 50 would pay almost double that.
California has a very similar plan to Nevada. They did talk to News 4 at their Sacramento complex.
Spokesperson Brad Pacheco explained prices are based on a complicated math formula aimed at keeping taxpayers from losing money in the deal.
“The purchase of airtime is calculated based on demographics and how much we're going to assume that we can earn on investments and then also how long the person is going to live,” Pacheco said.
Lawmakers designed airtime as a way to encourage early retirement - something the City of Reno knows about. A News 4 open records request reveals Reno bought airtime service credits for 16 employees back in 2009. City spokesperson Chris Good says they were trying to avoid layoffs at the time.
“People do this in the private sector all the time. As people grow nearing retirement and when it's time to severely cut costs that's one way to do it,” Good said.
That purchase cost the City about $360,000 however they argue it saved them more than two times that by the end of that year.
“One thing is if you lay someone off, the city has to pay unemployment. When people choose early retirement, we avoid that cost to taxpayers, so it came out at a pretty big savings for the city,” Good said.
But Pellisser still has his questions - saying some people like him will take advantage of the deal. He's now leading a pension reform movement that's trying to get rid of airtime purchases.
“I still think it's an incredible deal. It's all math,” he said. “What's wrong is that they are doing it in the first place.”
