For immediate release:
March 13, 2014
INDIANAPOLIS - Legislation that tells state bureaucrats and the private sector that the Indiana General Assembly has had the final say concerning the pension benefits of public employees is on its way to the governor’s desk thanks to the extensive efforts of State Rep. David Niezgodski (D-South Bend).
With strong bipartisan support, representatives passed the Conference Committee Report on House Bill 1075, legislation coauthored by Niezgodski that prohibits the Indiana Public Retirement System’s (IPRS) board of trustees from using third party vendors to oversee annuities available to employees who work for state and local units of government and schools.
“The passage of this bill reflects a strong desire from both Republicans and Democrats that the state needs to be in control of the retirement benefits, rather than having those matters pushed off to a private party that is more interested in collecting profits for itself than protecting the futures of thousands of hard-working people across Indiana,” Niezgodski said.
State retirees are on a system that contains two parts: a defined benefit plan that is funded by the government and schools for its workers and a savings account that can be funded by employees or employers.
When a worker retires, he or she can cash out the savings account in a lump sum, roll it into a different retirement account, or convert it into an annuity that pays out benefits over the lifetime of the member.
At present, the annuity carries a 7.5 percent interest rate, which IPRS board members felt was too high. Their solution was to transfer administration of the annuities over to a third party, which would set an interest rate for the accounts.
In order to avoid privatizing Hoosiers’ retirement benefits and to protect the investments of thousands of state employees and teachers, the bill now offers retirees a 5.75 percent interest rate that will take effect beginning after Sept. 30.
“This interest rate is much more beneficial to state employees compared to the competitive market rate that it could have been lowered to had retirement funds been privatized,” Niezgodski said. “We have also added a two and a half year extension for members to continue to invest in their funds under the protection of the legislature and we will continue to fight to keep these investments out of the grasping hands of the private sector.
“We have done our very best to make the system fair and equitable in order to give these retirees confidence in their investments.”
Niezgodski attributes the legislation’s success to the work of the bill’s author State Rep. Woody Burton (R-Whiteland) in addition to the outstanding bipartisanship of members in both the House and Senate as legislators focused their attention on protecting the investments of state employees.