Defined-contribution pension plan needed

May 14, 2013

Last week Gov. Mary Fallin vetoed legislation which would have authorized an optional defined-contribution retirement plan for new state employees. Had the bill become law, employees would have had the opportunity to choose between this new defined-contribution plan and the current Oklahoma Public Employees Retirement System (OPERS), a defined-benefit plan.

For years OCPA has made the case for a defined-contribution plan. We believe that pension reform must:

• Ensure that current OPERS employees and retirees get the retirement they were promised;
• Set in motion a plan to pay down OPERS’ unfunded liabilities, ensuring that funding for core government services is not endangered by out-of-control retirement debt; and
• Establish a new retirement savings plan for state employees that fairly compensates them, ensuring that the state’s retirement contribution is comparable to that of private-sector employers.

There is no doubt that pension reform will continue to be discussed in 2013 and will be a hot topic during the 2014 legislative session. The question is whether the solution that emerges will be a half-measure (such as a “cash balance” plan, or a defined-contribution plan which is merely optional) or a robust solution that brings Oklahoma into the 21st century: a defined-contribution plan.