Oct. 4, 2012
FOR IMMEDIATE RELEASE
CONTACT: Brian Balfour (919) 834-2099
By a 12 percentage-point margin, North Carolinians believe state government should transition to offering state employees a 401(k)-style, defined-contribution retirement program, instead of continuing with the current defined-benefit pension plan.
That was the finding of a Civitas Poll of 600 registered voters in North Carolina which was conducted September 18-19, and had a margin of error of plus/minus 4 percent.
Forty-five percent of respondents supported the policy change, while 33 percent supported maintaining the current pension system.
“North Carolina taxpayers recognize that they must foot a growing bill racked up by unsustainable pension benefits promised by politicians to state workers,” said Civitas Director of Policy Brian Balfour. “State retirees enjoy pension benefits not only more generous than those offered to government workers in other states, but far more generous than those available to the majority of private-sector retirees. And private-sector workers are forced to subsidize the state pensions.”
North Carolina’s state pension plan is a “defined-benefit” plan – meaning that retirees are promised a set amount of benefits upon retirement. In the case of TSERS (the state’s primary pension fund), that benefit comes in the form of a monthly payment for the rest of their lives.
Pension benefits for North Carolina state government retirees are more generous than their private sector counterparts in a number of ways:
- The average annual public pension payout to North Carolina state retirees is $22,000. By comparison, the national average annual income from private-sector pensions and annuities is $13,222; a difference of 66 percent.
- Only about 20 percent of private sector workers have access to the same type of “defined benefit” retirement plan that North Carolina government workers enjoy.
- The “30 and out” eligibility provision that enables state retirees to receive full pension benefits after 30 years of service regardless of age is a service requirement offered to only 2 percent of workers enrolled in private-sector defined-benefit plans.
“As of 2010, the state’s primary pension plan had accumulated $2.8 billion in unfunded liabilities,” Balfour added. “Annual taxpayer support for the pension plan is estimated to total more than $800 million this year, and it will grow past the $1 billion mark within the next five years. North Carolina taxpayers seem willing to embrace pension reform that will save them billions of dollars while merely asking state employees to enroll in a 401(k)-style, defined-contribution retirement plan – which is what most private-sector workers have today.”
Text of question:
North Carolina state employees are offered a “defined benefit” pension plan. This type of plan is one in which employees contribute a set share of their income every year, and they are promised a certain level of annual benefits for as long as they live when they retire – depending on how long they have worked with the state. When state employee contributions fall short of pension obligations, taxpayers make up the difference. Most private sector employees, however, are offered a 401(k) style, defined-contribution retirement plan. Under this type of plan, workers select an amount to contribute each year with the employer matching a percentage of the employee contribution. The worker owns and manages the money in that account. When they retire, the amount of money in their retirement account is dependent upon how much was contributed plus any earnings.
Do you think North Carolina state government should switch to a new policy in which new state employees are enrolled in a 401k style retirement account or should state employees continue to be enrolled in the defined benefit pension plan?
45% Switch to a new policy
33% Continue in the defined benefit pension plan
19% Don’t Know
About the Poll:
This poll of 600 registered voters in North Carolina was conducted September 18-19, 2012 by National Research, Inc. of Holmdel, NJ. All respondents were part of a fully representative sample of registered 2012 general election voters in North Carolina. Sample methodology is List Based Sampling. For purposes of this study, voters interviewed had to have voted in at least one of the past two general elections (2008, 2010) or be newly registered to vote since November 2, 2010. Fifteen percent of this sample are “cell phone only” households.
The confidence interval associated with a sample of this size is such that: 95 percent of the time, results from 600 interviews (registered voters) will be within plus-minus 4 percent of the “True Values.” True Values refer to the results obtained if it were possible to interview every person in North Carolina who had voted in at least one of the past two general elections or is newly registered since November 2, 2010.
Crosstabs are here.
The Civitas Poll is the only regular live-caller poll of critical issues facing North Carolina. For more information on Civitas polling, see http://www.nccivitas.org/category/poll/.
More information on the Civitas Institute is available at www.nccivitas.org, or from Jim Tynen at (919) 834-2099.