Public Service Perspectives
Protecting Defined Benefit By Gary Feist, NDU Vice President of Public Employees
The North Dakota Public Employees Retirement System (PERS) board of directors had legislation introduced, Senate Bill 2046, that would have provided the fourth and final shared 1% and 1% contribution increase, putting the main retirement plan, covering state and political subdivision employees, on the path to becoming fully funded. PERS previously introduced this legislation during the 2011, 2013, 2015, 2017 and 2019 sessions, and each time it was defeated. With days remaining in the 2021 legislative session, SB 2046 was hog-housed (amended) to close the defined benefit (DB) plan to new hires without completing an actuarial study to know the implications of the plan. The closure of the DB plan would have placed all employees hired after December 31, 2023, in a defined contribution (DC) retirement plan, which is like a 401K. Legislators were clear the change would not affect current employees. The state has a contract with employees and is obligated to pay retirement benefits under the DB plan to current and future retirees that are part of the Plan. The amended bill included an infusion of $100 million and future cash infusions if the plan’s actuarial funded status dropped below 70%. The future additional contributions were legislative intent, but as public employees have experienced in the past, legislative intent rarely becomes reality. North Dakota United’s (NDU) activists 28
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ND United Voices
and the legislative team defeated this terrible legislation on the last day of the session. This will not be the last attack on the DB pension by political ideologues who want to move public employees to a DC plan placing all the investment risk on the employee. Over the interim, NDU along with our members and allies will continue the fight to maintain our DB plan, which provides for a secure retirement for the life of the employee. Other states have closed their DB retirement plans only to see costs skyrocket requiring the state to reopen their DB plan. An argument has been made that young employees want a DC plan because of the portability it provides if an employee leaves their job, but the research shows most employees including millennials prefer a DB plan. The PERS DB plan is a hybrid plan providing flexibility through the PEP program. An employee that contributes to a 457 plan (401K) can transfer up to 4% of the state’s contribution to their account bucket should they leave public employment and want to take their retirement with them providing portability as well as enhancing the employee’s retirement savings through an employee managed and directed 457 plan. Join the fight for a secure retirement through a DB plan and contribute to a 457 plan to enhance your retirement security.
