September 4, 2012 (PLANSPONSOR.com) - So far in 2012, eight states have made major structural changes in state retirement plans, according to a report from the National Conference of State Legislatures (NCSL).
Kansas, Louisiana and Virginia replaced defined benefit plans with cash balance or hybrid plans for new employees. Michigan has added an optional defined contribution plan for public school employees. Several states have implemented a longer period for calculating final average compensation.
Alabama will close its existing retirement plan for most state and local government employees December 31, 2012, and replace it with a new defined benefit tier that includes higher age and service requirements for retirement, a longer period for calculating final average compensation, a lower multiplier for calculating benefits and, uniquely in 2012, a reduced mandatory employee contribution. Kansas concluded a two-year reconsideration of its defined benefit retirement plans for state, school and local public employees with new statutory provisions that include generally higher contributions from current employees (or a reduction in benefits) and a cash balance plan for most new state, school and local public employees hired on or after January 1, 2015.