- Associated Press - Tuesday, May 20, 2014

OKLAHOMA CITY (AP) - Legislation that eliminates traditional pension benefits for newly hired state workers in favor of a 401(k)-style retirement plan was approved by the Oklahoma House on Tuesday despite concerns of opponents that it could force state workers to retire into poverty.

The House voted 58-33 for the measure and sent it to the state Senate, which has passed earlier versions of the legislation. Republican Gov. Mary Fallin has said she supports moving new employees from the state’s traditional pension system to the 401(k)-style benefit similar to that used in the private sector.

The House also voted 95-0 for separate legislation to authorize $36.8 million in pay raises for thousands of state employees in 25 state agencies including corrections workers, Oklahoma Highway Patrol troopers, child welfare workers and employees identified as the state’s most underpaid by a recent comprehensive employee compensation study.

Supporters of the pay raise bill said it was a companion measure to the pension overhaul legislation. The raises will range from 6.25 percent to 13.5 percent.

The pension measure creates a new defined contribution retirement system for state workers, beginning in November 2015. Workers hired before that time and retirees will keep their current defined benefit pension plan.

New state workers covered by the Oklahoma Public Retirement System would be required to contribute at least 3 percent of their salary to their retirement and the state would match employees’ contributions up to 7 percent.

The measure does not apply to correctional officers, probation and parole officers and other Department of Corrections workers whose jobs are classified as “hazardous duty,” as well as district attorneys and employees of prosecutors’ offices.

Supporters, including the measure’s author, Rep. Randy McDaniel, R-Edmond, said Oklahoma’s current public pension system has an unfunded liability of $11 billion and that the state spent $823 million last year just to service that debt.

“The costs are increasing and the costs are crowding out other priorities,” McDaniel said.

“That which is unsustainable will eventually go away,” said Rep. David Brumbaugh, R-Broken Arrow. Brumbaugh said the unfunded liability in Oklahoma’s pension systems is the result of cost-of-living adjustments for retirees that have been authorized by lawmakers over the years without the funding to pay for them.

“It’s years and years of saying: ‘Let’s kick the can down the road,’” he said.

Opponents said the change could leave future retirees with lower benefits than they would receive under the current pension plan. It could also place the retirement benefits at risk by forcing state workers to invest in the stock market and other private investment vehicles, opponents said.

“This is bad for public employees,” said Democratic Leader Scott Inman of Oklahoma City. Inman and others said the switch to a 401(k)-style plan is being pushed by private investment firms who want access to state worker retirement plans.

Rep. Richard Morrissette, D-Oklahoma City, compared the proposal to failed efforts in Congress to privatize Social Security. Morrissette maintained that Oklahoma’s pension system is 80 percent funded and was basically sound.

“What’s the problem? There isn’t any,” he said.

Rep. James Lockhart, D-Heavener, questioned the impact a stock market crash might have on state workers whose retirement accounts are invested in the market.

“They’re going to line up for welfare,” Lockhart said. He said 42 percent of state workers already qualify for some form of state public assistance due to low salaries.



House Bill 2630: https://bit.ly/1iQbij0



Click to Read More

Click to Hide