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State Pension Threat Levels

LAST UPDATED: May 21, 2008
This report is produced by the AFL-CIO Office of Investment

Three Alarms

Direct privatization threat, or significant threat of undermining retirement benefits.

Alaska

SB 1083 would restore defined benefit pensions to Alaska’s public employees after the state privatized the retirement system three years ago.  The bill moved through three Senate Committee’s during this spring’s 90-day legislative session, before it was stopped in the Senate Finance Committee, chaired by Senator Bert Stedman.  Senator Stedman was an earlier champion of the effort to privatize public employee pensions.

Kentucky

House Bill 600, the Administration's Pension Reform Bill, would have made some changes to the Kentucky Teachers’ Retirement System (“KTRS”) pension structure and medical insurance program for persons who would become members of the retirement system on or after July 1, 2008.  This bill would have made more significant changes to the pension structure and medical insurance program for new members of Kentucky Retirement Systems (“KRS”).  However, despite efforts from each body to reconcile the two, the version of the bill that passed in the House of Representatives differed from the version that passed in the Senate.  Therefore, House Bill 600 did not become law.

New Hampshire

House Bill 1645 would halve the number of public employees on the board that oversees the pension fund (New Hampshire Retirement System) that serves 70,000 public employees (50,000 current + 20,000 retired).  The bill would raise the retirement age for police and firefighters by five years (from 45 to 50), and eliminate the 8% annual increase in the subsidy retirees receive to buy health insurance.

Senate hearings have concluded on HB 1645 with Senator Burling, Chairman of the ED &A committee, offering his amendment on the bill.  There would be no two-tiering of group II (police and fire), no changes to the board of trustees, a temporary 4-year freeze of the medical subsidy escalator and a 2.5% cola for retirees under Burling’s bill as well as two study commissions on retiree medical benefits and colas. 

Rhode Island

A Commission empanelled by House Speaker William J. Murphy is examining all aspects of the state’s pubic employee pension system, including a possible recommendation to shift new employees into a defined contribution, 401(k) savings plan.  On May 14, the House approved a resolution extending the due date for the commission’s recommendations to July 31st, which will almost certainly be after the part time legislature goes home for the year.

Two Alarms

Threat of undermining retirement benefits.

Georgia

Senate Bill 328, sponsored by Senators Heath, Schaefer & Murphy, was introduced in 2007 and passed the State Senate.  It was later amended in the House, and didn’t progress any further.  The bill affects state employees, but not school employees or teachers.  It would reduce the retirement multiplier from 2% to 1% for new state employees, and add a mandatory DC plan with a partial employer match up to 2%.  It would be mandatory for new employees after 1/1/2009 and optional for those on the payroll at of 12/31/08. 

Utah

HB 202 was signed into law by the Governor after the 2008 session.  The bill allows certain elected state officials and appointed executives and senior staff elect to have the members' defined benefit balance transferred from the defined benefit system or plan to a defined contribution plan. It also allows certain employees to be excluded, upon written request, from future coverage under the Public Employees' Contributory Retirement System and the Public Employees' Noncontributory Retirement System, including employees of the Commission on Criminal and Juvenile Justice, employees of the governor's offices, and employees of the state treasurer and state auditor.

One Alarm

Potential threat through legislative uncertainty or funding shortfall.

Florida

Despite having the nation’s best-funded pension plan, Florida State Senator Mike Fasano introduced S. 396 to privatize the state’s retirement system and only offer defined contribution 401(k) plans for employees hired after January 1, 2009.  The bill died in the Committee on Community Affairs.

Illinois

With one of the nation’s most underfunded pension systems, the state is examining a range of approaches to tackle the funding shortfall.  Under the governor’s plan, the state would borrow $16 billion in low interest debt and pump the money into the pension systems.  Democratic lawmakers have called for an increase in the state’s income tax, to be used in part to pay down pension debt.  Business groups and Republicans continue to call for a defined contribution conversion.

New Jersey

The 2006 Public Fund Survey noted that New Jersey’s actuarial funding ratio is 78%.

Other

New York

The State Assembly has undertaken a new review of a bill offering New York City employees the ability to retroactively buy into an early retirement plan that was offered in 1995, giving city workers a second chance to retire at 55.  Another bill would allow nurses and midwives at city hospitals to retire at 50.

Pennsylvania

A multibillion-dollar bill to increase pension benefits for tens of thousands of retired state workers and teachers advanced out of a Pennsylvania House committee in early May.  The State Government Committee voted unanimously to send to the floor a bill that would provide increases that range from about 2.7 percent for the most recently retired to 25 percent for those who retired before July 1990.  The estimated cost is $10.4 billion over 20 years, but precise figures will depend on an actuarial analysis and whether the bill is altered further.

West Virginia

The West Virginia House approved legislation in late February that would clear the way for about 19,000 participants in the state’s Teachers’ Defined Contribution System to move their assets to the West Virginia Teachers’ Retirement System.  The legislation would provide $78 million from the state to help subsidize the transfer to the DB plan. It also would require at least 75% of the DC participants to approve the transfer.  Gov. Joe Manchin and state legislators have been working on a way to encourage migration to the DB plan since the state Supreme Court last month blocked a long-pending effort to merge the plans. The move was being encouraged because many DC participants don’t have enough in their accounts for retirement.  The $908 million Teachers’ Defined Contribution Plan, which has been closed to new employees since July 1, 2005, and the $3.6 billion Teachers’ Retirement Plan, both Charleston, were originally scheduled to merge July 1, 2006.

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