According to Greenville News, the bill will require workers hired after July 1, 2012, to work an additional two years to collect full retirement. Current employees would still be able to retire after 28 years of service. The bill will also increase workers’ contributions towards their retirement from 6.5% of salary to 7.5% over a two-year period.
The process for how benefits will be calculated will also be changed. Benefits will be based on the employees’ last five years of pay, rather than the last three years. Money that is paid for overtime, unused vacation and sick days at careers’ end would no longer be rolled in benefit calculations, reports Greenville News.
The bill will also tie annual increases in retirees’ checks to investment returns. A raise would automatically kick in only if the pension portfolio’s rate of return averages more than 7.5% over five years. It will also lock in the one-percentage point increase in employers’ contribution to their workers’ pension.
« SURVEY SAYS: Changing the Tax Treatment of 401(k)s