Gov. Mary Fallin signed a bill Friday that moves most future state workers away from a traditional pension plan where retirees get a fixed amount of money every month to a 401(k)-style plan in which the state contributes to employees’ savings.
The law does not cover teachers or employees who perform hazardous duty, including firefighters and law enforcement officers. It does not change the pension system for current employees or retirees.
“This bill allows flexibility for future state employees to take the money they have accrued if they change careers,” Fallin said. “That helps us to make state employment more attractive and aids in recruitment.”
She said the bill also allows the state to begin to address the unfunded liability within the state’s pension system.
“Oklahoma pension systems currently have $11 billion in unfunded liabilities,” Fallin said. “The system as it stands today is not financially sound or sustainable. Moving future hires to a 401(k)-style system helps to ensure we can pay our current retirees and employees the benefits they have already earned.”
House Bill 2630 affects employees hired after Nov. 1, 2015, who are part of the Oklahoma Public Employees Retirement System.
System employees will be required to contribute a minimum of 3 percent to their retirement, and the state will match employees’ contributions up to 7 percent.
The law will also apply to officials elected or appointed after Nov. 1, 2015.