Alabama Retirement Systems participants other than public safety employees hired after Jan. 1, 2013, will contribute 6% of pay, from the current 7.5% for existing state employees, under a pension reform proposal passed by the state Legislature this week that will also raise the retirement age for new state employees.
Law enforcement, firefighters and corrections employees will contribute 7%, down from 10%, and have a lower minimum retirement age.
Gov. Robert Bentley plans to sign the bill, according to a release on the governor's website.
“It's good for taxpayers and it's certainly good for members,” said David Bronner, CEO of the $26 billion Montgomery-based retirement system, in a telephone interview.
Mr. Bronner said the system worked with the Legislature to protect benefits to current employees and the bill puts Alabama more in line with other states that have enacted pension reform in recent years. The system is about 75% funded.
Currently, all state employees can retire at age 60 with 10 years of service or retire at any age after 25 years of service. The bill would raise the minimum retirement age to 62; 56 for law enforcement, firefighters and corrections employees.
Also, pension payouts will be determined by the average of the highest-paid five years out of the last 10 years of service, from three years.
The measure is expected to save $5 billion over the next 30 years.