If passed by the state Senate and signed into law by the governor, House Bill 2630 would create a new defined contribution (DC) retirement system for state workers, beginning in November 2015. Workers hired before that time and retirees would keep their current defined benefit pension plan.
The Oklahoma House voted 58 to 33 in favor of the bill and sent it along to the Oklahoma Senate, which has passed earlier versions of the legislation. Oklahoma Governor Mary Fallin says she supports moving new employees from the pension system to a 401(k)-style plan, according to the Associated Press.
New state workers covered by the Oklahoma Public Retirement System would be required to contribute at least 3% of their salary to their retirement and the state would match employees’ contributions up to 7%. The legislation would not apply to correctional officers, probation and parole officers and other Department of Corrections workers whose jobs are classified as “hazardous duty,” as well as district attorneys and employees of prosecutors’ offices, the news report said.
The bill was proposed as a way of dealing with the underfunded status of Oklahoma’s current public pension system, which has an unfunded liability of $11 billion, according to the bill’s author, Oklahoma State Representative Randy McDaniel. Since the 2008 financial crisis, many state and local governments have considered moving from a traditional defined benefit (DB) pension plan to a defined contribution plan (see “DB Plans Still Dominate for Municipalities”).
More information about House Bill 2630 can be found here.