(AP) — Democratic lawmakers and labor unions representing public
employees continued their push Monday against a change in how public
workers invest a chunk of their savings.
Public Retirement System's board voted over the summer to privatize the
payouts from annuity savings accounts. More than half of the 425,000
retirees invested through the state are enrolled in the popular program,
although the changes would only apply to new retirees after July 1,
officials have said But since the vote, Democrats and groups
representing workers have criticized the change, saying most of the
saved dollars would translate to broker fees for whichever company wins
the state contract.
tax dollar that goes into this system, for every workers dollar that
goes into this system, you get better value by doing this internally and
at-cost," Dan Doonan, a labor economist for the American Federation of
State, County and Municipal Employees, told members of the General
Assembly's pension oversight committee.
currently pay into the account over the course of their career and can
then reinvest that savings with the state when they retire. In return,
they're guaranteed annual payouts equal to 7.5 percent of the invested
INPRS board chose to stop administering the automatic payouts for
workers who retire after July 1, 2014. The board has hired an outside
consultant to draft a request for proposals seeking bids.
Executive Director Steve Russo told the pension committee last month
that figure would likely drop to an amount equal to the 10-year Treasury
yield plus another 1.5 percentage points, or an amount hovering around
current system, a worker who left with $30,000 in their annuity plan
would collect $2,250 a year on top of their state pension. Assuming a
4.25 percent return from a private broker, that amount would drop to
Tallian, D-Portage, proposed recommending the pension board hold off on
the change while lawmakers and the public continue vetting the proposal.
The panel's chairman, Sen. Phil Boots, R-Crawfordsville, said a decision
would be made at their next meeting.