IMPORTANT:
Today we testified about SB 492 in the Senate Pensions and Labor Committee. It is a large bill with many parts to it. We testified that we were favorable to most of them, but we were against the part that will make new state hires to PERF automatically default to a Defined Contribution plan instead of the Defined Benefit unless they choose the DB.
(Why does this matter to us? Historically, when the Legislature votes on language that affects PERF, they eventually make it apply to TRF also.)
I know this may sound confusing. IT IS. I felt that some of the committee members probably didn’t understand its implications. But as you have heard from us over the past many months, we must take a stand against a Defined Contribution that takes away the safety of a secure pension in retirement and may, in certain circumstances, leave much less money available for retirement.
To do immediately:
Write to the list below, and in your own words, tell them that our position is that a Defined Benefit is less costly and better for retirees then a Defined Contribution. Then ask them to amend SB 492 by taking out the language that puts new state hires into the DC unless they choose the DB.
Second, tell them that the you feel that the Legislature should instruct INPRS to do an in-depth actuarial study to determine the total cost to the state if they were to move from the DB to the DC as the default option for the newly hired PERF and TRF employees.
I am attaching a page of talking points that you can look at if this still seems confusing. We also have a list of talking points on our website under Legislative Resources.
If you can’t write to all, please use the first group the Republican members.
Senate Appropriations Committee:
Republicans
Chair Luke Kenley s20@in.gov
Ryan Mishler s9@in.gov
Phillip Boots s23@in.gov
Ed Charbonneau s5@in.gov
Douglas Eckerty s26@in.gov
Brandt Hershman s7@in.gov
Pat Miller s32@in.gov
Brent Waltz s36@in.gov
Carlin Yoder s12@in.gov
Democrats
Karen Tallian s4@in.gov
Earline Rogers s3@in.gov
Mark Stoops s40@in.gov
Greg Taylor s33@in.gov
Why the Indiana Retired Teachers Association must oppose a move from Defined Benefits to Defined Contributions (DB vs. DC.)
1. With a 401 k, benefits cease when the balance is depleted, leaving a possibility of many needing state welfare assistance to live.
2. Without a retirement benefit, many will leave for higher paying jobs in the private sector. As teachers, we are concerned, as are you, in having the best and brightest people in the classrooms of Indiana.
3. There will still be a need for continued maintenance of the original DB plan. Also, a need for administration of both plans—more costly than managing one plan.
4. The cost of DB plan would climb since no new members would be entering the plan.
5. Taking it out of the hands of experts and giving it to the amateur means less money earned. This would have an impact on the community because there is the strong possibility of less money spent there.
6. Leakage—the loss of money into the plan through borrowing and not being paid back, or just the loss of interest money, even when a loan is repaid. Again, this would lead to people depending more on welfare programs or living with hardship.
7. DB assists employers in promoting an orderly turnover.
8. Timing is critical. An employee who retires just at a down-turn could lose much of his or her retirement income.
9. Stability for the community and the state! In a down-turn, the public pension is a stabilizing influence. If everyone has lost his or her income, the resulting comeback could be much worse. In an economic down-turn, those with a pension still get the monthly check to spend in the community, thus making it less dangerous for the local businesses to stay open.
10. Those who spend their careers in service to their communities and to their state deserve the chance to Retire with Dignity with the expectation that their retirement will last their lifetime.Excerpts from:
House Committee on Pensions and Investments. Texas House of Representatives, Interim Report 2000: A report to the House of Representatives 77th Texas Legislature
Legislator’s Guide to Nebraska Retirement Systems, December, 1998
Opdyke, Jeff, The Wall Street Journal, “State Worker’s Pension Plans Spark Debate,” May 5, 2000
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