Tuesday, August 05, 2014
Ind. Gov't. - More on Lake County and the impact of PERF changes
Updating an ILB post from July 29th headed " Double whammy of PERF changes and criminal code changes," quoting a story from the Chesterton Tribune, the NWI Times followed over the weekend with several stories.
Bob Kasarda's Aug. 2 story is headed Government employees, teachers leaving to avoid retirement losses." It begins:
Porter Superior Court Judge Roger Bradford will begin a sixth term in January without the benefit of his staff of three and their combined 67 years of experience at his side.But another Times story, by Bill Dolan on Aug. 3, is headed "Lake County government employees prefer payroll to pension."
His bailiff, court reporter and executive assistant are all retiring Aug. 29, in part, to avoid reductions in the amount of money they expect to receive from a portion of their public employee retirement plan benefits.
Executive assistant Julie Powell said she and the others at the court have to leave now to avoid watching the returns on the annuity portion of their retirement slip from a guaranteed 7.5 percent, despite market fluctuations, to lower market rates over the next few years under a measure enacted by state lawmakers to reduce the chance of unfunded liabilities.
The upcoming losses proved incentive enough to convince the court staff to follow through on retirement plans when Bradford surprised them by opting to seek another term.
"We said, 'Hey, we're in the mindset to go now,'" Powell said.
The loss of retirement money not only affects state and local government employees, but teachers as well. While there is no mass exodus among educators occurring across the region, some are calling it quits to avoid losing any money on their self-funded annuities.
And Dan Carden of the Times reported Aug. 3:
INDIANAPOLIS -- The annuity options for retiring public employees, including teachers, may have been much worse if it wasn't for the intervention of a small group of Hoosier lawmakers, including state Sen. Karen Tallian, D-Ogden Dunes.
In July 2013, the trustees of the Indiana Public Retirement System, known as INPRS, voted to eliminate state-managed annuities for new retirees starting July 1, 2014.
At that time, retirees would be required to turn over their lump-sum annuity savings account to a private financial company if they wanted a lifetime monthly benefit to supplement their modest pension payments.
INPRS officials said longer life expectancies and a promised 7.5 percent interest rate made the state-managed annuity unsustainable in the long run and could lead to unfunded liabilities if the state's returns on annuity-backed investments dropped significantly.
Led by Tallian, the General Assembly'sPension Management Oversight Commission said in October that decision was unacceptable.
The panel concluded that, even if INPRS reduced its annuity interest rates to market rates, the state-managed option remained superior because it is fee-free and not seeking to earn a profit like a private insurance or financial management company.
INPRS trustees rejected the commission's recommendation and unanimously voted in December to move forward with privatization.
The Republican-controlled General Assembly moved quickly after convening in January to overrule that decision.
House Bill 1075, cosponsored by Tallian and state Rep. Chuck Moseley, D-Portage, barred privatization prior to 2019, though it permitted INPRS to lower its annuity interest rate toward market rates.
The legislation passed the House 83-0 and the Senate 39-8, but minor differences in the two proposals sent the measure to a House-Senate conference committee where Republican Gov. Mike Pence got involved.
"We tried to get rid of privatization altogether, but the governor's office put the kibosh on that -- threatened to veto it," Tallian said. "We tried everything that we could."
In the end, the House, Senate and governor agreed to a three-year moratorium on privatization and an annuity interest rate phasedown to 5.75 percent for retirees after Oct. 1, and 4.5 percent or the market rate, whichever is lower, for retirees purchasing an INPRS annuity after Oct. 1, 2016.
Posted by Marcia Oddi on August 5, 2014 10:24 AM
Posted to Indiana Government