CARSON CITY — A bill seeking to change the public employees retirement system for future hires by switching to a mostly defined-contribution plan was introduced Monday in the Assembly.
Assembly Bill 190, sponsored by Randy Kirner, R-Reno, seeks to eliminate the long-term unfunded liability of the Public Employees Retirement System, now projected at about $12.5 billion, by moving away from the existing defined-benefit plan.
Existing public employees would see no change to their retirement benefits.
“The bill protects people that are in PERS today,” Kirner said. “A promise made is a promise kept.”
But for those hired by state and local government agencies starting on July 1, 2016, a new hybrid retirement plan would be in place.
Kirner said there would still be a defined-benefit element to the plan worth 6 percent of an employee’s salary that would be paid by the public agency. This piece of the plan is intended to account for the fact that Nevada public employees do not pay into social security, he said.
The remainder of the retirement plan would be a defined-contribution plan, with 6 percent being provided by the state or local government agency and another 6 percent coming from the employee.
For police and fire, the defined-contribution rate would be 9 percent each from the employer and employee.
There would also be a special assessment to help retire the long-term unfunded liability for the retirement plan as it exists now for current public sector workers.
The bill was referred to the Assembly Government Affairs Committee. A hearing date has not yet been set.
There has been an effort nationally to change public employee retirement plans to get away from the defined-benefit concept, where retirees receive a set pension each month based primarily on years of service and salary. Such plans carry a taxpayer liability. Defined-contribution plans do not create a taxpayer liability.
The PERS board has in the past opposed any such change to the plan.
Supporters of the current plan argue it is well managed and that the unfunded liability will be paid off over time. A report by the national firm of Aon Hewitt recently described the system’s actuarial funding policy as “best-in-class.”
But Kirner said the unfunded liability of the plan has grown over the last 15 years from $3 billion to the current $12.5 billion.
Contact Sean Whaley at email@example.com or 775-687-3900. Find him on Twitter: @seanw801.