Bruce Lear lives in Sioux City and has been connected to Iowa’s public schools for 38 years. He taught for eleven years and represented educators as an Iowa State Education Association regional director for 27 years until retiring. He can be reached at BruceLear2419@gmail.com 

 “Wait an hour before swimming, or you’ll drown.” “Never shower in a thunderstorm.” “Sitting too close to the TV will ruin your eyes.” “If you get close to a train it will suck you in.”

Those were some of the mom myths I heard growing up. They might not have been true, but even now, I don’t shower in a storm or wander too close to a train.

There are also comfortable myths we remember from elementary school that humanized historical figures. George Washington had wooden teeth, Ben Franklin discovered electricity, and Paul Revere rode through the country shouting, “The British are coming.” We’ve all heard them. We probably all believed them. They were harmless exaggerations.

But some myths aren’t harmless.

It’s time to bust some of those harmful myths surrounding the Iowa DOGE task force recommendation for the Iowa Public Employee Retirement System (IPERS). More than 400,000 Iowans are covered by IPERS. Eliminating or weakening this retirement system would not only hurt those covered but would devastate Iowa’s economy.

Myth 1: A 403(b) is like IPERS

Private sector employees may have 401(k) plan, while those working for nonprofits or government bodies may have a 403(b). There’s certainly nothing wrong with using a 403(b) to save for retirement, but the systems aren’t the same. IPERS is a defined benefit pension plan. It promises a specific monthly benefit to an employee upon retirement. Employees and employers contribute fixed amounts, which IPERS invests.

A 403(b) is a defined contribution plan. That means the employee (and often an employer) contribute a chosen amount to an individual retirement plan. The final amount at retirement is based on the contributions and how well the investments performed. An employee might need an investment adviser.

Myth 2: Changing IPERS will produce big savings for the state

IPERS is funded through a combination of investment earnings and employee and employer contributions. Investment returns fund approximately 70 percent of IPERS, with employee/employer contributions funding the remainder. Actuaries consider IPERS one of the better funded pensions in the country.

So, wouldn’t the state save big on its IPERS contribution if new public employees were changed to a 403(b) system?    

The short answer is no, unless the plan is for no state contributions toward employee retirement. Generally, in a 403(b) system the employer matches or provides some contribution to employee retirement. Without an employer’s contribution toward retirement, it would be extremely difficult to recruit employees.  

Myth 3: IPERS is a free employee benefit

Most public sector bargains include the cost of IPERS. If the bargain is a 3 percent total package, that package includes the cost of IPERS. For example, public school employees may contribute 6.29 percent of their gross salary and the employer contributes 9.44 percent for a total contribution of 15.73 percent. The state, cities, and counties use similar employee/employer percentages, but they vary slightly based on job titles.

Myth 4: It’s possible to change the retirement system for new employees only

That change would underfund the system. IPERS funding is based on a large pool of employees and employers participating. If new employees are moved to another system, the funding will crash. It’s the same reason allowing young people to opt out of Social Security is a terrible idea.

Editor’s note from Laura Belin: The DOGE task force listed several “success indicators” including, “Aim for significant uptake of the direct contribution plan (e.g., 25% or more of new employees) as a demonstration of demand for portability and to stabilize pension costs.” (see page 115 of the final report).

Myth 5: DOGE is looking at the whole picture

They’re not. The Iowa DOGE recommendation was to bring public sector worker retirement in line with the private sector. They conveniently ignored the wage gap between the public sector and private employers. 

For example, according to the Economic Policy Institute, public school teachers earn an estimated 17.1 percent less than professionals with similar higher education degrees. 

IPERS is a self-funded pension system that does not receive money from the state general fund. It’s not broken. It doesn’t need fixing.

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Top photo was originally published on the official IPERS website.