Indiana moves state retirees to a market-based system that will likely cut benefits
By Josh Altic
The head of Indiana's pension system took some criticism on August 27 about the unanimous decision of the Indiana Public Retirement System board to take employees who retire after July 1, 2014, off of the previous annuity system with defined benefits and, instead, provide a market-based retirement system, which is dependent on actual investment performance. The previous system was based on a guaranteed rate of return at 7.5%. However, under the new system pension payouts will be tied to actual investment performance estimated to be about 4.25%, almost half of the amount provided by the annuity system. The Senate's lead budget-writer, Luke Kenley pushed for ending the annuity payouts because he was worried the state could not afford it.
Senator Karen Tallian (D-4) said, “This is a big decision that affects a lot of people. Frankly, I had expected that this was something that would be vetted before PMOC, at one or two meetings, rather than have you just come back and say, ‘Well, this is what we did.’” But Executive Director Steve Russo responded that the board's meetings were open to the public and that they had been discussing the pension system change for more than a year. Russo said, "I have no doubt in my mind there was complete and utter transparency."