Cash Balance Plan Could Tiptoe Back to Lawmakers
Representative Kevin Pearson, chairman of the House Retirement Committee, has prepared a bill that he hopes will improve the cash balance plan – despite that the plan is the subject of ongoing litigation. The plan was overturned in court because it didn’t get a two-thirds vote in the legislature.
If the State Supreme Court does uphold the decision, the bill could be used as a safety-net, and the cash balance plan could be brought before the legislature a second time.
The bill, as it stands, contains a few tweaks: if approved, members of the Hazardous Duty Service Plan could sign up for some benefits of the cash balance plan, it changes rules on withdrawal from the plan, and survivor and disability benefits.
But that could change if the court's decision comes down mid-session. "There are all kind of things you could do," Pearson said. "You could take a bill and make a substitute bill out of it."
Pearson thinks that if the plan went before legislators a second time, it could pass with a two-thirds vote. Because systems are having trouble financing liabilities, Pearson thinks it would be a bad political move for lawmakers to vote against it.
The cash balance plan was passed in an effort to make the retirement system more sustainable. “We represent a lot of people," Pearson said. "Well, when they’re ready to collect, I want to make sure the system is actually intact and able to pay at that point in time.”
Pearson says the legislature doesn’t always get things right the first time. His committee will see several clean-up bills, for many of the state’s 13 retirement systems, in the upcoming session.