SB 328 requires all newly hired employees to participate in PERS' defined contribution plan, and eliminates the option for newlt hired employees to participate in the defined benefit plan. In addition, the bill appears to change the formula by which employee/employer contributions are currently calculated, resulting in an overall reduction in contributions for individual employees, while reducing associated costs for public employers.
Particularly in the wake of the United States financial meltdown, defined benefit plans are an attractive option in the labor market. Employers who can offer defined contribution plans have certain competitive recruiting advantages over employers who offer only defined contribution plans.
This bill would eliminate those recruiting advantages for public employers. Given looming labor shortages resulting from baby boomer retirements, public employers will be hard pressed to compete successfully for qualified and capable employees. Removing the defined benefit option will take away one advantage for public employers, even though, as mentioned above, overall retirement costs are reduced.
I recommend that we watch this bill, but do not actively support or oppose it.
For more reading on the "employer pick up" provisions of the bill, see: http://www.irs.gov/govt/fslg/article/0,,id=181694,00.html
SB 328 requires all newly hired employees to participate in PERS' defined contribution plan, and eliminates the option for newlt hired employees to participate in the defined benefit plan. In addition, the bill appears to change the formula by which employee/employer contributions are currently calculated, resulting in an overall reduction in contributions for individual employees, while reducing associated costs for public employers.
ReplyDeleteParticularly in the wake of the United States financial meltdown, defined benefit plans are an attractive option in the labor market. Employers who can offer defined contribution plans have certain competitive recruiting advantages over employers who offer only defined contribution plans.
This bill would eliminate those recruiting advantages for public employers. Given looming labor shortages resulting from baby boomer retirements, public employers will be hard pressed to compete successfully for qualified and capable employees. Removing the defined benefit option will take away one advantage for public employers, even though, as mentioned above, overall retirement costs are reduced.
I recommend that we watch this bill, but do not actively support or oppose it.
For more reading on the "employer pick up" provisions of the bill, see:
http://www.irs.gov/govt/fslg/article/0,,id=181694,00.html
http://www.irs.gov/irb/2006-35_IRB/ar08.html