They're here...by Pat Thompson, Council 2 Deputy Director on March 4, 2013
The anti-worker pension bills we’ve been worried about have arrived.
Both were late being introduced, but that didn’t stop the majority in the Senate from fast-tracking them in the hearing process. The worst of the two is Senate Bill 5856, sponsored by Rodney Tom (D/R — no, that’s not a typo). This measure was introduced on Friday and heard in committee on Monday.
Although the Ways and Means Committee is supposed to study the fiscal impacts of legislation, the New Majority held hearings without even knowing what these ill conceived measures would do to our pension system and the state coffers! Senator Tom’s tortured logic in introducing such a measure included the usual public employee bashing. We are still awaiting a fiscal note, but it’s clear that they are intent on destroying our pension system even if it costs the state millions to do so.
SB 5856 not only forces all new hires into a 401(k) plan, it also seeks to force all current employees under 45 years old into the new system.
The second bill Senate Bill 5851, sponsored by Senators Bailey (R), Hill (R), and Baumgartner (R), is a lesser version of the same flawed concept. This measure would create an option for new hires and current members to join a 401(k) plan that is 20 percent cheaper for the employer but more expensive for the employee, while providing no guaranteed benefit.
Here’s what both plans have in common:
1) They jeopardize the stability of the current plans. Any plan that results in fewer people going into Plan 2 hurts Plan 2. It’s simple: The new entrants balance the system.
2) They jeopardize the stability of the State Investment Board. Because 401(k) plans require a lot of cash on hand, the SIB cannot invest our funds in long-term, stable and high-return assets.
3) Closing or limiting plans will cost the state millions upfront unless they cut their share (currently 50 percent) and put all the risk on the employees while enriching the Wall Street bankers with higher fees.
4) The current open plans are well funded and the State Investment Board return on investment is among the country’s best. “If it ain’t broke, don’t fix it.”