Niezgodski worries that pension changes forcing state worker retirements; seeks study of impact

August 26, 2014 David Niezgodski

For immediate release:
Aug. 26, 2014


INDIANAPOLIS – Worried that administration-mandated changes are forcing thousands of public employees at the state and local level across Indiana into early retirement, State Rep. David Niezgodski (D-South Bend) today asked lawmakers to examine the scope of a problem that he said is depriving Hoosiers of years of experience in dealing with their problems.

“What we are beginning to see is that the changes demanded by the Pence Administration are starting to compel many, many fine people into early retirement, simply to achieve the benefits they have worked so many years to earn,” Niezgodski told members of the Interim Study Committee on Pension Management Oversight.

“Those who will hurt the most from this decision are the people of Indiana,” he added. “The people who are leaving are the ones who make our county courthouses and city halls run when citizens need their help. Most critically, we are starting to see many fine men and women with years of experience in our classrooms make the decision to leave ahead of time, simply because they felt they had no choice.

“Before we go any further, we must stop to see what we as a state are losing through this misguided plan,” Niezgodski said.

The focal point of this pending crisis has been changes made to the retirement plans provided for state and local public employees.

One portion of that plan is an employee-owned, state-managed annuity savings account that can be converted into an annuity administered by the Indiana Public Retirement System (INPRS) that issues a monthly check based upon the value of the annuity and its interest rate, which is at 7.5 percent until October 1.

The INPRS trustees first attempted to privatize management of those annuities in order to reduce the interest rate. Lawmakers balked at that decision and tried to pass legislation banning privatization. When Gov. Mike Pence threatened to veto such a plan, a compromise proposal was passed that installed a moratorium on privatization until January 2017, but also called for a phase-down of the interest rate over the next few years.

“The first phase-down—from 7.5 to 5.75 percent—takes place on October 1,” Niezgodski noted. “What we are seeing are workers across this state choosing to retire before that date, so they can get the full benefits that they had come to expect.”

The legislator said there has been no empirical evidence of the numbers of employees affected, although one news account said the state expects a 25 percent jump in retirements in the Public Employees Retirement Fund (PERF) and the Teachers Retirement Fund (TRF) in 2014 over 2013.

“The only evidence we know about for sure comes from media accounts that tell us about increased retirements at places like the Greenfield Central Junior High School and in Porter County government, but I am sure these stories are being repeated all across this state,” Niezgodski said. “They paint a story of people who have given much of their working lives to serving others, but now feel they have no option but to retire to get the benefits they deserve.

“This human toll needs to be recognized, particularly by an administration that prefers to look only at the bottom line,” he continued. “As lawmakers, we are responsible to ensure their interests are protected, even if that concern does not come from our governor.”