Members of a legislative panel are asking the Indiana Public Retirement System Board to back down from its decision allowing a private company to manage part of public employees’ pensions.
The Public Retirement System, or INPRS, Board voted in July to privatize annuity savings accounts offered to public employees and teachers. Under INPRS management, the accounts earned a fixed interest rate of seven and a half percent, which the board felt was unsustainable. The interest rate would be considerably lower under private management, which uses market rates.
Indiana’s teachers union says the difference could mean thousands of dollars less for retirees.
The Pension Management Oversight Commission, or PMOC, Monday approved recommendations that INPRS undo its decision to privatize the annuities and set a new fixed interest rate that’s more sustainable.
INPRS spokesman Jeff Hutson says the board will certainly consider what the commission recommends.
“I don’t know what the board may do based on those recommendations because clearly they are very concerned, as is PMOC, with making sure that the pension plan is properly funded and nothing is done to weaken the system financially,” he says.
Senator and PMOC member Karen Tallian, D-Portage, says if INPRS ignores the commission’s recommendations, the legislature could take more decisive action.
“I think that the INPRS Board was looking for a little direction from the legislature and hopefully they just got it. It was a unanimous, bipartisan recommendation,” she says.
The INPRS Board is scheduled to meet Friday.