House approves bill to close the "defined benefit" retirement plan
The House has passed a measure to close the state employees’ “defined benefit” retirement plan – and require new hires after Jan. First, 2025 to be on a “defined contribution” plan.
The rationale for the change is that the current plan faces a big unfunded liability.
The bill would use Legacy Fund earnings to help make sure current retirees will be paid what they expect from a “defined benefit” plan.
"To continue down the road of 'defined benefit' is like buying two tickets on the Titanic, knowing full well what's going to happen," said House Majority Leader Mike Lefor (R-Dickinson). "IT's a terrible strategy."
But Rep. Corey Mock (D-Grand Forks) said the Legislature had been aware of the unfunded liability since the 2008 market crash. He said the Legislature had a plan at that time to make it whole – but didn’t follow through.
"This is a crisis of our own creation," Mock said. "Intentionally done, so that we can be in a place to look at the fund and say, 'It's underfunded — we have no choice but to use state dollars, Legacy Fund earnings, whatever it is, to close this out. It's our only path forward.'"
The bill – HB 1040 – passed on a 77 to 16 vote. It will now be considered by the Senate.
The Senate has passed a measure – authored by Sen. Sean Cleary (R-Bismarck) – to keep the “defined benefit” plan in place, but give state workers the option to have a “defined contribution plan.”