The Oklahoma Senate Pension Committee advanced a bill to the full Senate that would move new employees of the $8 billion Oklahoma Public Employees Retirement System into a new defined contribution plan.
The bill does not apply to police officers, firefighters or teachers. If the bill becomes law, it will become effective for employees hired on or after Nov. 1, 2015.
Under the bill, employees would contribute a mandatory minimum 3% to the DC plan. Government employers would match contributions up to 7%.
Oklahoma City-based OPERS already administers a $618 million 457 deferred compensation plan and a $165 million 401(a) money purchase plan. The bill says the newly created DC plan should use investment options that are “substantially similar” to the existing plans.
Gov. Mary Fallin praised the committee for advancing the bill.
“Moving to the more modern, 401(k)-style model helps state government to accomplish two important goals,” Ms. Fallin said in a news release. “First, it helps us to recruit qualified new hires by providing more flexible, versatile retirement options. … Second, it helps to stabilize the pension system for current public employees. Oklahoma pension systems currently have $11 billion in unfunded liabilities. The system as it stands today is not financially sound. It's important we shore up our pension systems so we can pay out the benefits we have promised to our retirees.”