Senate Committee Approves Future State Employee Retirement Act

The Senate Pensions Committee today approved legislation that will move state employees hired after Nov. 1, 2015 away from the traditional defined benefit to a defined contribution plan.

This change is only for new state employees, but will keep the promises made to current workers. The defined contribution plan will make Oklahoma better able to attract the next generation of state employees who value portability when it comes to their retirement plans, while helping lower Oklahoma’s unfunded pension liability over time.

“We always talk about the importance of running government like a business. This is a transition that much of the private sector made over a decade ago,” said Senate President Pro Tempore Brian Bingman. “Kicking the can down the road is no longer an option.”

Senate Bill 2120 requires an employee to contribute a minimum of 3 percent of their salary up to 7 percent, which will then be matched by their employer in a 401 (k)-style plan. Employees designated "Hazardous Duty" are exempted from the bill, including fire and police. Teachers are not included this year. The law will apply to officials elected or appointed after November 1, 2015.

“We have made great strides in lowering our state’s pension liability, but more must be done,” said Sen. Rick Brinkley, author of the bill and chairman of the Senate Pensions Committee. “Let me be very clear—this piece of legislation does not affect anyone currently employed by the state. We believe that for us to continue to attract the best and the brightest, we must provide the next generation of state employees a retirement system that is reflective of their needs, allows an employee to take their retirement plan with them if they choose to leave and prevents politicians and bureaucrats from harming their retirement. We have a responsibility to our grandchildren to ensure they are not on the hook for this liability years from now.”

The legislation passed the Senate Pensions Committee today with a vote of 5-2 and now moves to the full Senate for further consideration.