A bill designed to switch new state employees who participate in the Oklahoma Public Employees Retirement System from a defined benefit plan to a 401(k)-style defined contribution plan was approved Tuesday by the state Senate Pensions Committee.
House Bill 2630 passed the committee 5-2 on and will now go to the full Senate.
Committee Chairman Rick Brinkley, R-Owasso, debated in favor of the bill, contending changes are needed in Oklahoma’s pension system to attract and better serve young workers who change jobs often.
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.
Employees who leave their jobs after one year or more would be entitled to not only get their own contributions back, but also a percentage or all of the state’s contribution, plus investment earnings, depending on how long they worked for the state.
Under the existing defined benefit system, workers don’t become vested at all until they have worked 7.5 years for the state, which means employees who leave before then only receive their personal contributions back, with no investment earnings or state match.
Brinkley said the state benefits financially at the expense of employees if they leave before 7.5 years, a situation he described as “unconscionable.”
State Sen. Tom Ivester, D-Elk City, debated against the bill, questioning whether enough financial analysis had been done to make sure this was the best move for the state.