New state employees who participate in the Oklahoma Public Employees Retirement System would be switched to a 401(k)-style defined contribution plan under a measure approved Tuesday by the state House of Representatives.
House Bill 2630 passed the House 58-33. It now will go to the state Senate.
House author Randy McDaniel, R-Edmond, debated in favor of the measure, saying “this plan offers great investment choices, low expenses, and a matching schedule competitive with the largest and most successful companies.”
McDaniel also argued it is good for taxpayers.
“The state has over $11 billion in unfunded liabilities,” he said. “We spent $823 million last year to service those debts. We spent a like amount to pay for the new benefits. The costs are increasing, and the costs are crowding out other priorities. The status quo is not working for those who support better pay, fixing our infrastructure and less government debt.”
State Rep. James Lockhart, D-Heavener, was among numerous House members who argued against the bill, contending it would mean less money for most state employees upon retirement.
“When we go to this defined contribution (plan), if the stock market crashes, what happens to these thousands of state employees who are on a defined contribution retirement? I’ll tell you what’s going to happen. They’re going to line up down at the DHS office in Poteau. They’re going to line up for welfare.”
The proposed defined contribution system would enable new workers to contribute between 3 and 7 percent of their salaries into the retirement system and receive a dollar-for-dollar match from the state. Participants would become 20 percent vested in the retirement system after one year, and that percentage would increase annually until they become completely vested after five years.