Most new state employees would no longer be included in Oklahoma's traditional pension retirement plan under a proposal to be pushed next year by the governor.
Gov. Mary Fallin vetoed a bill this year that would have given new employees the choice of opting out of the traditional pension program in favor of a defined contributions plan.
She felt the voluntary opt-out did not go far enough to improve the fiscal condition of the state's pensions.
“I didn't think it would have an impact on the system because it's voluntary,” Fallin said. “I thought they were making political statements more than being serious about pension reform. If we're going to do pension reform we need to do truly pension reform and not make it voluntary and make it kind of window dressing.”
Her veto was intended to send a message to the Republican-controlled Legislature, state Treasurer Ken Miller said.
“Sometimes bold leadership prevails and you have to get some attention in order to make something a priority,” said Miller, a Republican as is Gov. Mary Fallin. “Mary vetoed that bill because she knows that something much better, much more stronger is needed.
“It did send a message to the public and to the Legislature that major reform is needed and this has to be a priority next year,” said Miller, who also is chairman of the Oklahoma Pension Commission and was asked by the governor to advise her on pension changes.
Republican legislative leaders say they expect interim studies later this year to look at proposals to change the state's pensions.
Defined or combined?
Current state employees would remain with the defined benefit plan.
Miller said exceptions to requiring new employees to go to a combined benefit plan might be given to police, firefighters and troopers because of the risk they face in their occupations.
Under Fallin's proposal, new employees would take part in a defined contribution plan similar to a 401(k) plan, which would provide employees with a payout when they retire based on the amount of money contributed and investment gains or losses.
Fallin said making a defined contribution plan the only option would meet the needs of a modern workforce and catch up with the private sector and many other states by moving toward a 401(k)-style retirement plan that provides portability, flexibility and choice. When Oklahoma's pension systems were created, it was common for a worker to spend 25 to 30 years in the public sector. Today, the average state employee leaves much sooner, usually for the private sector, she said.