Public Employee Pension Systems

Abstract

With the passage of the Social Security Act old age benefits are provided for all employees in private employment in the United States. In Wisconsin, the employees of the police and fire departments have had a pension system under the Wisconsin statutes for a good many years. This pension system provides for a 1 percent contribution on the part of the employees, the balance to be made up by various special revenues and such tax monies as are necessary. Among these special revenues is 2 percent of the premium paid on fire insurance policies and all rewards and donations earned by policemen and firemen in the performance of their duties. A man is eligible for pension after 22 years of service and the pension which he receives is 50 percent of his final wage, with special provisions for taking care of widows and orphans. This is a very generous system but cannot be used as a basis for general pension systems as the cost from tax monies would be prohibitive. The public school teachers in Wisconsin also have the Teachers' Retirement Law which provides a pension for such teachers. The teachers contribute 5 percent of their salaries and the State contributes 5 percent, raised through a surtax on incomes. This money is invested by a special board set up in Wisconsin known as the Annuity and Investment Board. With the policemen, firemen and the school teachers provided with pension systems there is a minority group of city employees who are not eligible for pension under the Social Security Act, nor any state authorized system among these are water utility employees. While the State of Wisconsin has as yet no pension system for state employees a bill has recently been introduced into the Wisconsin legislature providing for such a system. This is based on employees' contributions beginning at 2 percent of their salaries for the first year and increasing 1 percent per year until the employees will contribute 5 percent of their wages, the maximum contribution being