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Bill to change the state retirement plan for new hires is now in House Appropriations

ND United President Nick Archuleta
ND United President Nick Archuleta

The House Appropriations Committee is now considering a measure that would change the retirement plan for most state employees to a “defined contribution” plan.

Right now, the plan is “defined benefit.” The measure would implement the “defined contribution” plan for new hires, effective January first, 2025.

The bill’s supporters say the current plan has an unfunded liability of $1.8 billion.

"At the end of the day, the defined benefit plan, in my mind, is a train wreck that's going to cost us more and more dollars," House Majority Leader Mike Lefor (R-Dickinson), the bill's sponsor, told the Committee. "Let's take the liability that we have, pay the unfunded liability, move to a highly competitive defined contribution plan — in fact, I've had people say it's too rich."

Lefor told the Committee younger workers prefer a “defined contribution” plan, because of its portability.

The president of North Dakota United – the union that represents public employees – said the Legislature is at fault, because it had a chance to address the unfunded liability, but kept kicking the can down the road. Nick Archuleta said a bill in the Senate would keep the defined benefit plan. It has been introduced by Sen. Sean Cleary (R-Bismarck) and Sen. Dick Dever (R-Bismarck), and House Minority Leader Josh Boschee (D-Fargo).

"It will be a lot cheaper for the state of North Dakota, and a lot more surety for public employees, as well as the agencies who hire them," Archuleta said.

The committee only heard from the sponsor, as well as the chairman of the House Political Subdivisions committee — Rep. Austen Schauer (R-West Fargo) — plus a representative of Legislative Council. Rep Robin Weisz (R-Hurdsfield) proposed an amendment, to give current state employees an incentive to join the defined contribution plan. That came with a $25 million price tag. The measure's opponents were not allowed to testify at the Monday late afternoon hearing.

The House bill is HB 1040. The Senate bill is SB 2239.

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