[r74] Arnold Account: Giving public employees retirement options (3/21/2014)

Friday, March 21, 2014

Start Date: 3/21/2014 Start Time: 8:00 AM
End Date: 3/21/2014 End Time: 8:00 AM
Giving public employees retirement options

During session, a lot of media coverage is devoted to a very small number of hotly debated bills. Although good and rigorous debate on the legislation we work on is critical to the success of the democratic process, it doesn't necessarily reflect the majority of the legislation the House passes in a short session, given most bills garner bipartisan support and make common sense changes to Indiana law that increase Hoosiers’ quality of life.

Now that things are slowing down after the General Assembly’s recently concluded session, it’s good to pay a bit more attention to those bills that didn't produce a lot of media coverage while they moved through the House and the Senate; a great example being Senate Enrolled Act (SEA) 117, which deals with retirement funds for public employees.

SEA 117 allows the board of trustees of the Indiana Public Retirement System (INPRS) to distribute additional contributions posted to a Public Employees’ Retirement Fund (PERF) or Teachers’ Retirement Fund (TRF). Currently, employees who will receive a pension from PERF or TRF get their benefit amount determined based on their account at retirement—but any additional money not accounted for in their Annuity Savings Account (like bonus pay, sick or vacation leave) is paid out in a one-time lump sum.

Without the option to spread these payments out, public employees will often get unintentionally bumped into a higher tax bracket than normal, placing an unfair tax burden on teachers and other public employees when they retire. By giving the INPRS board of trustees more discretion in paying these additional funds, particularly by allowing them to spread it out rather than paying as a lump sum, we can avoid making recent retirees unnecessarily pay more in taxes.

Furthermore, SEA 117 requires that if the amount being paid to an employee exceeds $1,000, then the employee must consent to whatever form of distribution the INPRS board of trustees chooses. This will protect recent retirees further by ensuring they agree with the form of payment chosen, so they aren’t taken advantage of.

Although SEA 117 isn’t a very flashy law and might not make the evening news, the difference it can make in the lives of teachers and other public employees across the state is very real. It passed out of committee unopposed and was supported by both the House and the Senate unanimously. I’m pleased to be a part of this kind of legislation, and I look forward to working on other issues that directly benefit Hoosiers in their daily lives.

Arnold Account_SEA 117.docx