A pension bill was passed out of committee today. We have no word yet on whether or not it will be picked up for a vote, but we have to keep up the pressure on the Legislaors to VOTE "NO" AGAINST House Amendment 10 to SB1673!!!
Here is a summary of what the bill would do:
- Does NOT contain any cost shift to local school districts or colleges.
- Freezes (pauses) ALL COLAs for current or future retirees for almost 7 years (from the immediate effective date of the bill until January 1, 2020).
- Once the freeze is over, no COLA until age 67, and then a 3% compounded COLA only on the first $25,000 in benefits for those without Social Security (teachers, university staff, legislators and some State employees) or the first $20,000 for those with Social Security (some State employees). No minimum on years of service. The maximum COLA payable would become a simple $750.
- Raises employee contributions by 2% of salary, phased in over two years. Does not allow the contribution increase to be used for the Money Purchase Benefit.
- Caps benefits at final average salary (“pensionable” salary) at higher of (1) current salary for past 365 days or per union contract or (2) the indexed Social Security wage cap (currently $113,700).
- No defined contribution plan on salary above the Social Security cap. No cash balance plan for new hires and no change in Tier 2 benefits except makes Tier 2 legislators’ COLA match others at lesser of 3% or half CPI (legislators had been at lesser of 3% or full CPI).
- Prohibits the use of sick leave to be used for service credit for new hires.
- Strengthens funding formula to reach 100% funded in 30 years. Even with this improvement, benefit reductions should mean net annual savings to the State.
- Adds a PERMISSABLE funding guarantee: Allows systems to sue the State to enforce annual payment of normal cost plus payments on the unfunded over a “reasonable” period of time according to “accepted actuarial standards.” Tries to make this guarantee a constitutionally protected contract obligation. Additionally, the language provides for payment deviations if there is a hardship.
- Requires the State to contribute an extra $1 billion year to the systems beginning in FY20 when FY11 pension bonds are paid off and current pension bond payments decline by $600 million from FY19. This extra payment continues through FY45 or until the systems are 100% funded.
KEEP CHECKING BACK FOR UPDATES ON THIS AND OTHER LEGISLATIVE ISSUES!!! WE CONTINUE THE FIGHT!!!