The Foundation says the Fair and Sensible Public Employee Retirement Plan Reform Act aligns state and local government retirement benefits with those offered by the federal government and large private employers.
The proposal includes a provision for employees hired after July 1, 2013, to be eligible for a defined contribution (DC) plan. It also calls for the defined benefit (DB) pension for new employees to not exceed the defined benefit formula offered to federal workers on January 1, 2011.
The proposal also aligns the retirement age for state and local government workers to that established by the Social Security Administration (currently 62). Those employees not covered by social security would be given a supplemental defined benefit equivalent of social security.
Under the Foundation’s proposal, public employees and taxpayers would share costs. Current and future employees would pay half the cost of pension and retiree health benefits.
The Act allows for public employees to discontinue participation in their pension plan and select a lower-cost plan, and to opt out of their retiree health plan.
It also calls for improved governance and accountability of public pension plans by providing that two-thirds of a public pension plan’s governing trustees shall be independent of the retirement system and two-thirds of independent trustees shall be certified or licensed financial, actuarial, accounting, legal, benefits or investment professionals.
The complete proposal can be viewed at http://www.fixpensionsfirst.com/2011/04/cffr-proposal/.The Little Hoover Commission also recently put forth a reform proposal that would offer a hybrid plan for California state and local government workers (see Commission Calls for Hybrid Plan for CA Government Workers).