An interim Legislative committee has begun work on changing the retirement plan for state employees from its current “defined benefit” plan to a “defined contribution” plan.
The chairman of the interim Retirement Committee – Rep. Mike Lefor (R-Dickinson) told the committee that’s the charge given to it by the 2021 Legislature.
"This doesn't give us the flexibility of saying 'yes' or 'no,'" Lefor said.
Lefor said the study resolution calls for the current system to be closed to enrollment in 2024. After that date, new employees would be required to enroll in a defined contribution plan. Existing state employees would stay on the current plan.
The discussion is driven by an unfunded liability in the current Public Employees Retirement System plan – estimated to be more than $1.5 billion.
"I don't think there would be much disagreement in this room that it's unsustainable," Lefor said. "Should we continue to proceed down this path, it could easily be $2 billion to $3 billion, from prior research I've seen."
Lefor said he wants the key stakeholders to be at the table during the discussions.
"You're part of this," Lefor said. "We want solutions. We want to hear how you think that this can work."
A representative of the National Conference of State Legislatures told the Committee a number of states and other political subdivisions have made changes in their retirement plans. NCSL Director of Employment, Labor and Retirement Programs Luke Martel told the Committee the options range from defined contirbution plans to hybrid plans.
"There's no 'one size fits all' solution for sustainable retirement benefits," Martel said.
The committee plans to hire a consultant to help it look at the various options.
