Connecticut Gov. Dannel P. Malloy proposed splitting the State Employees Retirement System in two as part of efforts to make the system more affordable, during a cabinet meeting Wednesday.
Mr. Malloy’s proposal would divide the $10.4 billion Connecticut State Employees Retirement System into a closed pay-as-you-go plan for one group of retirees that account for most of the current unfunded liability, and an open plan for two other groups of retirees that would be 95% funded and sustainable.
He also suggested reducing investment return assumptions for both the state employees system and $15.8 billion Connecticut Teachers’ Retirement Fund.
Also included in Mr. Malloy’s suggestions were implementing actuarial improvements recommended by a Boston College study, including use of “level dollar” amortization and a 15-year rolling amortization period; controlling future benefit costs through collective bargaining; and especially by avoiding retirement incentives, contribution holidays or other similar damaging practices.
“Together, as Democrats and Republicans, we can use this moment to not only address our short-term situation, but also to have an important conversation about the sustainability of our budget over the long term,” Mr. Malloy said in a news release. “By setting clear priorities and making smart investments, Connecticut can create a sustainable budget and a sustainable economy.”
The governor plans to present the ideas to the state’s legislative leaders. David Bednarz, spokesman for the governor’s office, could not be reached by press time.