Lawmakers mull changes to North Dakota Public Employees Retirement System plan
BISMARCK, N.D. (KFYR) - If you or a family member works for the state government, you really care about what benefits the state offers its employees. And lawmakers are looking to make big changes to those benefits this Legislative Session.
You know what’s complicated? Benefits plans. But without getting too in-the-weeds, here’s what some lawmakers are trying to do: right now, the state’s employees are on a defined benefit plan, where the state specifies the retirement income employees will get: think pensions. But some lawmakers are hoping to switch over to a defined contribution plan, where the employee plays a larger role in investing for retirement: think 401(k) plans. But, like most things, not everyone is on board.
Representative Mike Lefor is concerned about the North Dakota Public Employees Retirement System, which he says is only about 65% funded.
“The concern is that if we don’t do something now, there could be a situation not too terribly far down the road, 20-25 years from now, where the plan might be insolvent,” said Representative Lefor, R-Dickinson.
That’s why he’s throwing his full support behind a bill that would transition the benefits to a defined contribution plan.
“I truly believe that the younger generation wants to have defined contribution plans so they can control their own money. The defined benefit plan doesn’t allow them to do that,” said Rep. Lefor.
But Senator Sean Cleary says there’s another way to address the issue.
“I don’t think we should spend billions of dollars to get to that point. We’d effectively be spending billions of dollars for a less effective retirement plan,” said Senator Sean Cleary, R-Bismarck.
Representative Lefor’s bill would cost around $5.5 billion over 20 years, according to a committee that studied it. That’s why Senator Cleary has a different solution to the underfunded state benefits plan.
“Defined benefit pension plans are, I think more efficient from the state’s perspective and generous for employees in their retirement compared to a defined contribution plan,” said Cleary.
Cleary’s plan would allow for state employees to opt into a defined contribution plan if they wanted. Both Representative Lefor’s and Senator Cleary’s plans would contribute $250 million to keep the state’s defined benefit program afloat for current state employees.
Representative Lefor’s plan wouldn’t do away with pension plans for current employees. What it would do is stop offering it for new hires. I’ll keep you up to date on these bills as they move through the Legislature.
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