There has been a flurry of news recently about states trying new approaches to address their pension messes. Here’s a nifty summation of what has transpired over the past month or so. It’s a reference guide you might want to keep handy as a compare-and-contrast tool as we await the Colorado PERA board’s recommendations on how to slow the bleeding in its retirement funds.
Here are a few highlights from other states:
- South Carolina is raising employer and employee contributions and lowering the annual assumed rate of return. Employer contributions will increase two percentage points, to 13.56 percent. After fiscal year 2018, employer contribution rates will increase by an additional 1 percentage point per year through the 2023 fiscal year.Employee contributions will climb to 9 percent from 8.66 percent, and will be capped there through 2023.
- In New Jersey, Gov. Chris Christie left his beach lounger long enough to sign a state budget that includes a $2.5 billion state contribution to the $73.6 billion New Jersey Pension Fund. That contribution includes an estimated $1 billion from the proceeds of the state lottery.
- In what some are now calling the banana republic of Illinois (it does make Washington D.C. seem like a well-oiled machine), the state’s first new budget in three years includes hybrid defined benefit-defined contribution pension plans for all new hires into the $47.3 billion Illinois Teachers’ Retirement System.
- In Michigan, a new law requires “establishment of a new hybrid pension plan and new defined contribution plan for public school employees hired after Jan. 31, 2018. The new plans will be part of the $44.7 billion Michigan Public School Employees Retirement System.”
Get out your Magic 8 Ball and see what it tells you about PERA’s recommended fixes. We’ll know in the coming months.