Oklahoma Gov. Mary Fallin vetoed a pension reform bill that would have given new hires a choice between entering a defined contribution plan and participating in the $7.5 billion Oklahoma Public Employees Retirement System, Oklahoma City.
The bill also would have required all officials elected for the first time after 2014 to participate in the DC plan.
“Unfortunately, HB 2077 qualifies as window dressing, not real reform,” said Alex Weintz, spokesman for Ms. Fallin, in a statement. “The bill moves only a tiny fraction of state employees (0.003%) to a defined contribution system rather than a defined benefit system. It has negligible savings for state government and gives the false and damaging impression that significant action is being taken to address the state's unfunded liability.”
In her veto letter to the state Legislature, Ms. Fallin said the bill failed to address any of the real structural challenges with the state's DB plans, which have a combined $11 billion unfunded liability. She added there is “no measurable impact on the state's unfunded liabilities due to unknown variables such as the number of individuals that may voluntarily elect to participate, their potential career length and salary of those participants.”
“Defined contribution plans offer more cost-certainty to employers, but only if there is meaningful participation rates,” the letter states.
Ms. Fallin has favored a more comprehensive reform approach, including consolidating the administration of all the state plans under one umbrella to save on costs.