The pension reform package, sponsored by Senator Debbie Lesko in SB 1428 and SB 1429, has passed and will makes several changes to the current Public Safety Personnel Retirement System, which has long been seen as financially-strained and unsustainable for members and taxpayers alike.
Reforms, which affect new hires only, include:
•Requiring new public employees to serve until the age of 55 before being eligible for full pension benefits, which will reduce costs to states and cities (taxpayers) and improve the sustainability of the fund;
•Placing a hard cap on pension benefits for new hires to crack down on “pension spiking” and ensure predictability and accountability for taxpayers;
•Splitting the cost of pensions 50/50 between employers and new employees to bring the system more in-line with other state retirement plans, ensure both sides have skin in the game and reduce risks to taxpayers;
•Providing new hires the option of a 100-percent defined contribution plan, similar to a 401K, which allows for increased flexibility and portability of the employee’s funds (e.g. if they move out-of-state);
•Tie cost-of-living adjustments for retirees’ to the regional Consumer Price Index, with a cap of 2 percent. In order for this change to apply to current members of PSPRS, it will require voter approval on May 17.