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Wednesday, January 15, 2014

Ind. Gov't. - More on "House panel votes to block annuity privatization plan"

Supplementing this ILB post from last yesterday, Niki Kelly reports today in a story headed "Bill stalls teacher pension cuts." Some quotes (HB 1075):

When someone retires, the person can take the money built up in the savings account as a lump sum or receive monthly annuity payments from the Indiana Public Retirement System calculated with an automatic 7.5 percent interest rate.

About 50 percent of retirees take the annuity option.

The Indiana Public Retirement System board decided to privatize the annuity system with a third-party vendor using market-based rates. According to state pension officials, the current market rate would be from 4.0 percent to 4.5 percent.

This would result in a cut of tens of thousands of dollars to beneficiaries.

The bill passed in committee would prohibit the annuity board from privatizing the annuity program for five years. This would give older employees who had planned to retire soon the chance to do so without major changes.

During that five-year period, the pension board can set the annuity interest rate annually – but not lower than the rate of return earned by the retirement accounts. The current rate is about 6.5 percent.

Posted by Marcia Oddi on January 15, 2014 02:36 PM
Posted to Indiana Government