A confidential source working as a campaign advisor on Healey’s gubernatorial campaign told the newspaper that the lieutenant governor would make her announcement sometime Wednesday. The source said Healey, if elected, would make the plan a top legislative priority.
Healey is following the lead of states such as Alaska and Michigan which switched over to 401(k)-type plans to ease the burden on their stressed pension systems. Alaskamoved to the plan in May to lessen the system’s estimated $5.7 billion to $6.2 billion shortfall (See Alaska Senate Refused Delay in Retirement Plan Overhaul ).
According to an outline of Healey’s plan, she estimates that the combined effort of all the steps in the plan would bring more than $350 million annually in investment gains and administrative savings to the state’s current outdated pension system, according to the Globe.
Healey’s plan would allow plan participants to open individual IRA-style accounts, or they could invest their money in state-run Pension Reserves Investment Trust (PRIT) accounts, with a portion of the account matched by the state. For more conservative participants, Healey’s plan would offer the less-risky 10-year treasury bonds.
Most public-sector workers would have to contribute at least 9% of their pretax pay into these accounts, the Globe reported, and can annually contribute up to $15,000. The proposal exempts newly hired police and firefighters.
Healey’s proposal includes handing over sole control of the government’s pension plans, small and large, to PRIT, which includes teachers pensions as well as the pensions of most state workers, according to the Globe.
PRIT’s assets equal about $35 million, and during the past decade, its assets have post an approximate11.59 % annual return. Pioneer Institute, a Boston think tank, found that PRIT also has performed sixth-highest out of 104 systems in the past two decades, the Globe reported. Also Pioneer found that PRIT has out earned retirees’ regular pension plans by about $1.6 billion in the past decade.