By Jessica Love
Some of the accusations that have been lobbed in my direction – but aimed at legislators – over the past week have been pretty harsh. Words like “elder abuse” and “disgusting” and “immoral” have all been thrown around. Hypothetical plans to vote people out of office have been cited as the only means of rectifying the issue of their legislators thinking it’s optional to provide benefit enhancements to retired public employees.
But technically, it is optional. Retirees depend on the favor of legislators every budget year to help get them over the hump for the next two. But until a couple of years ago, it was seemingly unconscionable to not approve a 13th check. And when that happened in 2021, legislators said they didn’t understand how important the 13th check was to pensioners, over the 1% cost-of-living-adjustment, or COLA, they approved instead.
The reason for that preference is simple: For 69% of retired public employees, the annual extra checks ranging from $150 to $450, based on years of service, are far more beneficial than the level of COLAs that are being offered in lieu of the 13th check. And while posturing around a 13th check might include claims that it’s more of a Bandaid that doesn’t solve the underlying issue of low-level pensions, the problem with that theory is that the solution being proposed isn’t significant enough to solve it either. So, the Bandaid is better.
And to be clear: My claim around this Bandaid belief isn’t just based on retirees’ feelings or perceptions that they’d prefer an instantly gratifying one-time check in their accounts over the boost in their base benefit over time. A “benefit” that, in 2022, amounted to less than $25 extra over the course of the year for far too many.
The organization I lead represents about 40,000 of the active and mostly retired members of the Public Employees Retirement Fund. We’ve had actuaries study the breakeven point on the benefit of the COLA vs 13th check. And considering the population we serve, sadly, many won’t see the breakeven on the 2022 COLA in their lifetime. That was already bad enough.
But now that the Senate – with eyes wide open about beneficiary sentiments favoring a 13th check over a COLA – opted to study 0.5% COLAs this year, instead of giving retirees either a (legitimate) COLA or a 13th check, life will become a financial battlefield for many already on the brink.
So, it’s understandable that many are mad. It’s understandable that many are disappointed. And it’s understandable that many are feeling unheard and unseen.
What’s not understandable is how legislators can justify the abundance of raises they doled out to public employees this year at the same time when, for those who have wrapped public sector service and rely on elected officials to take care of them in retirement, they’ve decided pensioners should go without benefit enhancement for two years straight – for the first time since the 1970s.
Especially with inflation where it is today, something’s a little wrong with that math.
About the author: Jessica Love is executive director for the Retired Indiana Public Employees Association, a statewide membership organization for retirees and active employee members of the Public Employees Retirement Fund. Since its founding by the Indiana Legislature in 1972, RIPEA has grown to serve approximately 40,000 PERF members. RIPEA’s mission is to improve the quality of life for members primarily through protecting and enhancing their retirement benefit through public policy and advocacy efforts, providing group insurance, and creating opportunities for retirees to connect.
Jessica Love is the Executive Director of the Retired Indiana Public Employees Association
