Rell Puts Forward Benefit Unfunded Liability Reduction Plan

September 7, 2010 (PLANSPONSOR.com) – Connecticut Governor M. Jodi Rell has proposed a sweeping public employee pension and health care benefit reform package in an effort to deal with the state’s $34-billion unfunded benefit liability. 

A news release from Rell’s office said Rell wants to invest a “sizable” portion of any resulting savings toward reducing the unfunded liability. 

The proposals include establishing a defined contribution plan for new employees, capping pension salaries at $100,000, increasing the normal retirement age to 65 and the early retirement to 60, and hiking the early retirement penalty.

According to the news release, other parts of Rell’s plan include:

• Increasing employee contributions toward both pension and other retiree benefits. Under a recent state union agreement, current employees with less than five years of service and all new employees must contribute 3% of their earnings to help pay for retiree health benefits. Previously, there was no contribution from active employees to fund retirees’ health plans.
• Establishing a rule that there would be no cost of living adjustment (COLA) in years where there are negative investment earnings.
• Moving final average salary computation from three years to five years for pension purposes.
• Reducing the timeframe for buying back military and other service.
• Reducing the anti-spiking provision from 30%  to 18% over the previous two years’ earnings.