|Posted:||March 12, 2017 05:41 PM|
|From:||Representative Warren Kampf|
|To:||All House members|
|Subject:||Pension Reform - Side By Side Hybrid Plan from the Conference Committee Report|
|In the very near future, I am going to introduce legislation that mirrors the side-by-side hybrid pension reform plan from the House and Senate Conference Committee Report of last fall. This side by side hybrid plan, which consists of a reduced pension benefit for future hires and a new 401k type benefit that both begin to accrue from the first dollar of salary, is the only type of plan in the last seven (7) years that has ever passed both the Senate and the House and made it to a governor’s desk. A stacked hybrid plan, on the other hand, has only passed this House, and the straight DC has never even been called up for a vote in either chamber. Although I will support both of those plans because they are good plans, I have real doubts about whether the Senate would pass a stacked plan, and I doubt even if we passed a straight DC plan that the governor would sign it. If we want to bet on a plan with a history of passing both chambers, a side-by-side hybrid is the one such plan. The current governor has said he would sign this type of legislation. To me this side by side is the best recipe for success built on our past experience and years of trying to build consensus.
Side-by-sides also have the advantage of shifting risk more quickly than stacked hybrids, although nothing shifts risk like a straight DC plan. This legislation will have a straight DC option in it.
While the savings numbers for this side by side plan are several billion dollars, savings off of what is now our $200 billion payment plan--that is what the taxpayers need to pay over the next three decades to fund our current pension commitments--will never compare to the impact of risk shifting. The faster we shift the risk away from the taxpayer, the faster we leave behind the danger zone. Large savings, that is, savings which our school districts and our general fund would feel immediately, can never really be achieved without huge additional payments beyond our ability to pay. Beefing up the savings by a few extra billion dollars in any plan, but not shifting risk as quickly, is more a sacrifice than a success.
Most future employees in SERS and PSERS will be mandatory members of the hybrid plan although uniformed officers and corrections officers will be exempt from hybrid plan participation in this legislation. To me, while these exemptions detract from any reform legislation’s main goal, they are necessary based on past experience with vote counting in the House and Senate.
Future higher education employees may join the already existing independent retirement plan—which is a 401k style plan--or the new hybrid plan. The “footprint rule” is applicable to current state and school employees who return to active service after a break in employment. Such employees will remain in the existing DB plan for future service. The bill will not alter pension benefit calculations for current state and school employees. The bill will have the same vesting period for future PSERS and SERS members—10 years.
Please co-sponsor this legislation with me.
Introduced as HB930