By Bobby Harrison/NEMS Daily Journal
JACKSON – State Sen. Hob Bryan, D-Amory, says a draft copy of the recommendations of Gov. Haley Barbour’s Public Employees Retirement System Study Commission would freeze the cost of living adjustment for three years and would base at least part of the benefits paid out to retirees on investment earnings.
Bryan said if the draft report were adopted by the 2012 Legislature and signed into law by the governor, “It would represent fundamental changes” to the system.
Currently the system, which provides retirement benefits to state and local government employees, is a defined benefit plan – meaning the guaranteed benefits are not based on investment earnings. Under a defined contribution plan, which often is a 401(k), the benefits are based on the investment earnings of the retirement plan.
Bryan sad the draft plan of the governor’s commission would make 50 percent of the Public Employees Retirement System a defined contribution plan.
PERS currently provides a 3 percent cost of living increase each year for retirees. The draft report, Bryan said, would recommend freezing the cost of living adjustment for three years.
Bryan was appointed to the commission by Barbour as a non-voting member.
The commission was supposed to finish its report by Nov. 15. When asked about the delay, Barbour said recently he was told the commission would finish its work and release a report this month.
He said he doesn’t know what will be in the report.
He formed the commission because of concerns about the sustainability of the system and with the amount of money it is costing the taxpayers.
PERS provides retirement benefits for state employees; local government workers, including police officers and firefighters; public school personnel, including teachers; and university and community college faculty. Almost 375,000 current and former public employees have some financial stake in the system.
The system, hit by a drop in investment earnings and in public sector employees and by enhanced benefits passed in the late 1990s, currently has 65 percent of the funds needed to pay its liabilities over the next 30 years. The industry recommends having 80 percent of the funds needed to pay those 30-year liabilities.
Earlier this year, PERS became an election issue. Democrats contended that Barbour and other Republicans would make changes to the system that would harm public employees, but House and Senate Republican candidates pledged to support the system.
In an October news release the House Republican Conference stated, “We, collectively and individually, will not support any suggestion, idea, thought or plan to eliminate the ‘13th check’ or in any way to change, alter or amend, in whole or in part, the arrangement current retirees and current employees have with PERS.” The cost of living adjustment often is called a 13th check because many retirees elect to receive it in a lump sum.
Republicans captured a majority in both chambers of the Legislature in the Nov. 8 elections.