Posted: Mar 29, 2013 11:48 PM by Jay Kohn - Q2 News
Updated: Mar 30, 2013 6:07 AM
HELENA - Montana voters will get a chance to decide the future of the state pension system, if a bill making its way through the 2013 legislature wins approval.
The plan is to put a referendum on the Montana ballot in November of 2014 that would change the state pension plan into a defined contribution benefit plan, much like a 401 (k) retirement plan.
Helena Senator Dave Lewis says the volatility of the stock market, makes the current guaranteed benefit plan for state workers, too much of a liability ....
"Taxpayers won't be guaranteeing the stock market performance for public employees," explained Lewis.
"We owe them the money, we're going to pay it off, but we want to see the end of it, so that's why Sen. Dee Brown and I are trying to put it on the ballot," said Lewis.
A defined benefit plan is similar to a 401 (k) that many private employers offer their workers.
Billings investment analyst Gary Buchanan, who's also sits on the state Board of Investments, says most private firms no longer offer guaranteed plans.
"Every private sector person I know is enrolled in a defined contribution with some modest pensions. We'd be crazy not to want a 7 3/4 % defined guaranteed benefit, who wouldn't want it," Buchanan said.
The proposed referendum, called the Fair Public Pension Act, would only affect new state employees, but it does represent a major shift in state policy....
"It's a huge policy decision, and we feel the most comfortable thing to do is put it before the voters," Lewis said.
Lewis is optimistic the referendum will make the ballot.
He needs only a majority of the legislature to go along with him, 26 votes in the Senate - 51 in the House. Already the bill has 25 co-sponsors.
Buchanan envisions a lively public debate over the issue.
"The 90 percent of us with defined contribution plans, and no pension, are going to be dam interested in having this on the ballot, if it gets to the ballot," said Buchanan.
As for the $4 billion dollar shortfall in the existing state pension system, two bills to help pay down that deficit over the next 20 years passed the Montana House this week.
Those bills rely on increased contributions from employees, unions and the state to help erase that unfunded liability.