The Oklahoma Public Employees Association (OPEA) told lawmakers, Wednesday, that pension reform should not be considered without first improving the pay for state employees. Sterling Zearley, OPEA executive director, informed an interim study looking at reforming state pensions that since pensions are tied to what employees earn, you must first address low pay in order to improve the pension system for employees.
State employees in the Oklahoma Public Employees Retirement System (OPERS) receive the lowest average retirement benefit of any state pension systems. OPERS retirees receive an average benefit of $15,679 per year according to OPERS director Tom Spencer. Retirees in the teachers’ system receive more than $18,000 a year on average. The low amount for OPERS retirees is mostly due to the low salaries that are well below what workers in the private sector earn.
State leaders say they are looking at revising Oklahoma’s public pension due to the unfunded liability of the some of the pension plans which they say lowers the state’s credit rating and potentially harms the state’s ability to conduct business. Several legislators said yesterday that they are looking at potential changes that would provide a retirement product that will help recruit today’s younger generation that tends to value a higher salary and a more portable retirement plan.
Sen. Rick Brinkley said in the meeting that any reforms would only be for new employees hired after the changes would be implemented. He said that it is important that the state keeps its promises to current retirees and employees.
Among the reforms being considered is changing some of the pension plans from a defined benefit plan to a type of plan that resembles a 401(k) system. The legislature is also looking at combining the administration of Oklahoma’s various pension plans into one board. The state may not, however, combine the funds in the plans due to state law and Internal Revenue Service regulations. OPEA believes that private, for profit, firms should not be used for managing pension accounts and that OPERS is best suited to manage pension funds.
OPEA has said that it would not support a strict defined-contribution plan and any savings achieved by reforms must be used for employee compensation and not for other purposes. The association could potentially support a system that would permit retiree cost-of-living adjustments (COLA) for its retirees when the OPERS system is at least 80 percent funded. The plan is currently 81 percent funded. Retirees feel that there is little hope of COLAs in the current environment.
Also, OPEA would not support moving the “hazardous duty” plan employees to another type of pension. At a minimum, those employees should remain in their current OPERS plan but OPEA is open to discussions about moving those employees to the Oklahoma Law Enforcement Retirement System instead of OPERS.
The association has made clear to lawmakers what is important in regards to the pension system, especially the need to support any system with improved salaries which is the basis for employees’ retirement. This topic continue to be important to OPEA during the upcoming legislation as will the topic of employee pay. It is vital that all state employees learn the facts about Oklahoma’s whole compensation program so they can best advocate on behalf of themselves, their coworkers and the programs in which they work.]]>