The state Senate Pensions Committee on Monday approved legislation that would move new state employees away from the state's traditional defined benefit pension plan to a 401(k)-style defined contribution plan.
Gov. Mary Fallin praised the committee's action Monday, while an organization representing state correctional officers criticized it.
“Moving to the more modern, 401(k)-style model helps state government to accomplish two important goals,” Fallin said. “First, it helps us to recruit qualified new hires by providing more flexible, versatile retirement options. Under this bill, state employees looking to change careers would have the option of taking their retirement money with them, rather than being locked into a mid-20th century pension system.
“Second, it helps to stabilize the pension system for current public employees. Oklahoma pension systems currently have $11 billion in unfunded liabilities. The system as it stands today is not financially sound. It's important we shore up our pension systems so we can pay out the benefits we have promised to our retirees.”
Oklahoma correctional officers are not convinced.
“Reducing benefits for future Department of Corrections employees only hurts staffing levels in what are already the worst staffed prisons in the country,” said Sean Wallace, executive director of Oklahoma Corrections Professionals. “Lawmakers should be addressing salaries and the dangerous staffing levels in the prisons before even considering cutting benefits.”
Senate Bill 2120 would apply to state employees hired after Nov. 1, 2015, who participate in the Oklahoma Public Employees Retirement System.
It would require new employees to contribute from 3 to 7 percent of their salaries, which would then be matched by their employer. Employees designated “hazardous duty” would be exempt under the bill, including fire and police employees. Teachers would not be included this year.
The change is only for new state employees. Current employees would keep their defined benefit plans.
“We always talk about the importance of running government like a business. This is a transition that much of the private sector made over a decade ago,” said Senate President Pro Tem Brian Bingman, R-Sapulpa.
The legislation passed the Senate Pensions Committee by a vote of 5-2. It now moves to the full Senate for consideration.