Photo: Noah Coffey (Flickr)
House lawmakers approved legislation on Thursday that would halt the Indiana Public Retirement System Board’s plans to outsource management of public employee pensions.
The Public Retirement System, or INPRS, Board voted last summer to privatize annuity savings accounts offered to public employees and teachers.
Under INPRS management, the accounts earned a fixed interest rate of 7.5%, which the board felt was unsustainable.
The interest rate would be considerably lower under private management, which uses market rates.
Public unions said the difference could cost new retirees’ thousands of dollars. Proposed legislation bars INPRS from hiring a private company to manage pensions until 2019.
It also allows the board to adjust its guaranteed interest rate each year to ensure solvency.
Whiteland Republican Representative Woody Burton, the bill’s author, says his biggest issue with INPRS’ decision is its immediate impact.
“Think in terms of somebody making 30 thousand dollars a year that has worked 25 years in the state government and they want to retire in the next five years,” Burton says. “Their choice – the way it currently is – they’d either have to retire this year or run the risk of losing 20% to 25% of their retirement.”
The bill unanimously passed the House. It now heads to the Senate.