The Connecticut General Assembly approved an agreement with the state employee unions on contract concessions on Monday, confirmed Chris McClure, a spokesman for Gov. Dannel Malloy's office.
The approved resolution will create a hybrid retirement plan for new employees, raise non-hazardous employee contributions for current workers and curb cost-of-living adjustments.
"The Connecticut state employee concessions package will help us get control of pension costs and build a more sustainable budget now and well into the future," said Lt. Gov. Nancy Wyman in a news release issued by the governor's office.
The pension portion of the agreement would reduce the state's share of pension contributions through fiscal year 2047 for a total savings to the state of more than $11.7 billion, according to Mr. McClure.
The proposal creates a Tier IV for new hires, combining a traditional defined benefit plan with a defined contribution plan. A 1.3% multiplier would calculate the defined benefit portion and employees would contribute 5% to that portion or up to 7% "if the return is less than 6.9%," according to the presentation. Whether this is an annual return or a multiyear annualized return was not disclosed.
The defined contribution portion would require employees to contribute at least 1% of their pay and the state would match 1%.
For current non-hazardous employees, the employee contribution within all current tiers of the $32.4 billion Connecticut Retirement Plans & Trust Funds, Hartford, would rise 1.5 percentage points, effective July 1. Tiers I, II-A and III currently contribute 2% of pay, while Tier II employees pay zero. The different tiers are based on when employees were hired.
On July 1, 2019, employee contributions would rise an additional 0.5 percentage points.
Finally, the framework proposes changing the COLA formula for retirements occurring after July 1, 2022, saying they will match the Social Security COLA index up to a maximum of 2% from the current minimum of 2%.
The Senate vote on Monday was 18-18, with Ms. Wyman casting the tiebreaking vote. The House of Representatives passed the resolution 78-72 on July 24. It does not need the governor's signature.
The agreement was originally announced by Mr. Malloy in May.