Raising state employees' retirement age and increasing their contributions are among the recommendations of a special commission examining Connecticut's underfunded pension and health plans.
However, the commission didn't reach a consensus on whether the state should close the existing defined benefit plan to new employees and require new workers to enroll in a new defined contribution plan or a hybrid plan.
“The intent was to lay out all of the options,” Michael J. Cicchetti, the commission's chairman and deputy secretary of the state's Office of Policy and Management, said in a telephone interview. “It's a framework of options. There are no specific priorities.”
The commission's report suggested establishing a minimum pension contribution rate for some employees while raising the rates “to levels found in other states, taking into account differing benefit levels and plan funding ratios.”
Currently, the employee contribution rate to the $8 billion State Employees Retirement System, Hartford, varies from zero to 5%.
The State Employees Retirement System is one of six state pension funds and eight state trust funds in the $22.3 billion Connecticut Retirement Plans and Trust Funds, Hartford, for which Denise Nappier, state treasurer, is principal trustee.
Gov. M. Jodi Rell created the commission in February to find ways to reduce Connecticut's $9.2 billion in unfunded liabilities for the State Employees Retirement System and another $24.6 billion in unfunded liabilities for the State Other Post-Employment Benefits plan, which consists primarily of retiree health insurance.
The commission noted the State Employees Retirement System's current 8.25% assumed rate of return — the rate had been 8.5% from 1993 through 2008 — is one of the highest in the country. Ten other states have an assumed rate of return above 8%, the report said.
Although the commission said the state should consider decreasing the assumed rate “to reflect more realistic and conservative expectations about the economy and capital markets,” it didn't prescribe a number.
The commission's report has been sent to Ms. Rell was well as to top state Cabinet officers and legislators, Mr. Cicchetti said.
The commission consists of four state government officials, representatives from the union representing state employees and local business, a public pension actuary and a certified public accountant.
The commission's proposals will need legislative approval and/or agreement from a coalition of the state's 13 public employees unions. Action on the proposals will not be taken until next year, when a new governor takes office and a new Legislature is seated following the Nov. 2 election. Ms. Rell is not running for re-election.
