MO - Only newly hired will see additional deductions for retirement system reform
From John Curry, July 15, 2010
Mo. lawmakers approve state pension system changes
(AP) – July 14, 2010
JEFFERSON CITY, Mo. — The good pension perks of government work are about to lose a bit of their luster for new Missouri employees.
State lawmakers gave final approval Wednesday to legislation requiring new state workers to pay a portion of their wages toward their pension funds and to stay on the job longer before drawing their retirement benefits.
Supporters said it was an essential move to stave off a future insolvency for Missouri's main pension funds, which currently are financed exclusively by investments and state subsidies. Opponents equated it to a tax on state workers, who already have been targeted with layoffs and denied cost-of-living raises to try to balance Missouri's budget.
The retirement system changes — effective only for workers hired beginning in 2011 — are projected to save the state $659 million over the next decade. Part of those savings are intended to offset a 10-year cost of up to $150 million for new automaker tax breaks authorized under a separate bill passed Wednesday.
The retirement legislation passed the House 84-53, getting just two more votes than the required minimum. It passed the Senate 25-5 and now goes to Gov. Jay Nixon.
Under the bill, new state employees will need to contribute 4 percent of their pay toward their pension benefits. They also will need to spend at least a decade working for the state to qualify for a pension, instead of the current five years.
And the state's standard retirement age would be increased from 62 years old to 67 years old. State employees currently also can retire when their age plus the number of years working for state government equals 80, so long as they are at least 48 years old. That option would be increased to a sum of 90, with workers needing to be at least 55 years old.
But lawmakers and other elected state officials would continue to get more favorable treatment. The bill increases their own standard retirement eligibility from age 55 to 62, with six years of service necessary for lawmakers and four years for executive branch officials.
The bill passed by lawmakers scrapped an idea of creating a special board to oversee investments for the Missouri State Employees' Retirement System and a separate pension plan for the Highway Patrol and Department of Transportation.
House members — some of whom were skeptical of the necessity of pension changes — were particularly concerned about creating the investment board. Rep. Jim Viebrock, who handled the pension changes in the House, has said the investment board unnecessarily expanded state government.
Nixon, who backed the pension changes, helped resolve disagreement over the legislation by declaring that creating an investment exceeded his agenda for the special session. Missouri governors are allowed to specify what topics can be discussed during special legislative sessions.
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Retirement bill is HB1.
posted by Kathie Bracy at 7:12 PM
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