Oklahoma pension plan changes are tabled

A proposal to consolidate boards and offices that mange Oklahoma's seven pension plans into one won't be taken up this legislative session. The state treasurer who supported the idea says he is hopeful an interim study on the topic can be done later this year.
BY MICHAEL MCNUTT mmcnutt@opubco.com Published: May 4, 2013
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“If you want to change the pension system, something as monumental as that, let's do it in the light of day,” said House Minority Leader Scott Inman, D-Del City. “Let's do it through the normal legislative process. We can certainly do it next year.”

A massive email campaign by teachers and firefighters to lawmakers was launched the past week.

“There was a lot of misinformation spread purposefully,” Miller said.

Administrative costs

Fallin, who asked lawmakers to consider changes to the pension system during her State of the State address that kicked off the legislation session in February, has said the state spends $80 million to $100 million each year to administer the pensions, and it could realize at least 15 percent in savings by consolidating the plans.

Miller, who also serves as chairman of the Oklahoma State Pension Commission, said the proposal would not change any benefits promised or currently being received, but is intended to reduce administrative expenses. An independent study showed savings could be as much as $50 million annually.

Miller said another pension proposal that won't be taken up this session would change the type of pension for state workers. State employees now pay into the retirement system to receive monthly pensions through a defined benefit plan based on a formula that takes into account their salary and duration of government work.

Martin suggested legislation that would require new employees 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.

Two years ago, the state 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.

Miller said the pension system's unfunded liability rate remains the biggest obstacle to Oklahoma obtaining a top AAA credit rating. Oklahoma has an AA2 rating.