INDIANAPOLIS — Democratic lawmakers and labor unions representing public employees continued their push Monday against a change in how public workers invest a chunk of their savings.
The Indiana Public Retirement System's board voted over the summer to privatize the payouts from annuity savings accounts. More than half of the 425,000 retirees invested through the state are enrolled in the popular program, although the changes would only apply to new retirees after July 1, 2014.
Pension officials have said But since the vote, Democrats and groups representing workers have criticized the change, saying most of the saved dollars would translate to broker fees for whichever company wins the state contract.
"For every tax dollar that goes into this system, for every workers dollar that goes into this system, you get better value by doing this internally and at-cost," Dan Doonan, a labor economist for the American Federation of State, County and Municipal Employees, told members of the General Assembly's pension oversight committee.
Workers currently pay into the account over the course of their career and can then reinvest that savings with the state when they retire. In return, they're guaranteed annual payouts equal to 7.5 percent of the invested amount.
But the INPRS board chose to stop administering the automatic payouts for workers who retire after July 1, 2014. The board has hired an outside consultant to draft a request for proposals seeking bids.
INPRS Executive Director Steve Russo told the pension committee last month that figure would likely drop to an amount equal to the 10-year Treasury yield plus another 1.5 percentage points, or an amount hovering around 4.25 percent.
Under the current system, a worker who left with $30,000 in their annuity plan would collect $2,250 a year on top of their state pension. Assuming a 4.25 percent return from a private broker, that amount would drop to $1,275 annually.
Sen. Karen Tallian, D-Portage, proposed recommending the pension board hold off on the change while lawmakers and the public continue vetting the proposal. The panel's chairman, Sen. Phil Boots, R-Crawfordsville, said a decision would be made at their next meeting.