Share “Fallin vetoes pension bill”

Fallin vetoes pension bill

A measure would have given some new Oklahoma employees the chance to choose between two retirement plans, but Gov. Mary Fallin said the measure didn't do enough to address the pension's $11.5 billion unfunded liability.
BY MICHAEL MCNUTT Modified: May 10, 2013 at 9:27 pm •  Published: May 11, 2013

In addition to administering most state agency employees' pensions, the Oklahoma Public Employees Retirement System also administers the pensions of most county workers and some city employees.

Unfunded status

“While HB 2077 is well intended,” Fallin wrote in her veto message, “it lacks any measurable impact on the unfunded status of the state's pension plans and fails to reduce the state's significant pension debts since participation is only voluntary for state employees and required for a small group of first-time elected officials. I cannot in good conscience sign HB 2077 into law.”

An analysis of HB 2077 by the House of Representatives fiscal staff said the excess employer contributions flowing to the system from new members electing the defined contribution plan should reduce over time the current unfunded liability of the defined benefit plan and result in savings.

However, the rate of reduction would depend on the number of employees electing the defined contribution, their payroll, their termination patterns and the defined contribution plan elections.

Two years ago, the state's pension system had a $16.5 billion unfunded liability, making it among the worst in the country. New laws passed in 2011 reduced the unfunded liability by nearly one third or about $5 billion.

Sluggish market returns were key factors in increasing the liability by $1 billion last year, putting the unfunded liability at $11.5 billion.