Personnel & Labor Relations

Select Committee on Pension Policy Discusses Legislative Proposals

The Select Committee on Pension Policy (SCPP) met recently and discussed pension policy issues that may be advanced during the 2009 legislative session, including the following two proposals:

Should the state improve the disability benefits provided in PERS Plans 2/3, TRS and SERS through either pension enhancements or through providing insurance products, or both? Possible options include:

1. The SCPP maintain the current policy and assume no additional responsibility for the disability benefits of the members and encourage the pension system employers to provide disability coverage, if they don’t already. This option would add no additional costs to the system and maintain the original plan design.
2. Expand Insurance Coverage to all Plan 2/3 members, since some employers do not provide disability insurance access as a benefit to their employees. This option could result in increased expenses.
3. Enhance disability benefits provided within the Plans 2/3. This option would add cost to the system, involve several policy decisions, and have administrative impacts.
4. A fourth option could be to combine elements of the insurance and pension-provided enhancement approaches of options 2 and 3 above. This would require further study.

The retirement systems provide a $150,000 death benefit for public employees who die as a result of a duty-related injury or illness. The benefit amount has not changed since the benefit was first established in 1996. The issue raises two questions; is the current amount of the death benefit sufficient or should it be increased for past inflation; and should the death benefit be protected against future inflation. The options being considered are:

1. Provide a one-time adjustment for past inflation increasing the amount of the death benefit to $205,000.
2. Provide an automatic CPI based COLA to the death benefit modeled after the COLA provided for pensions in Plans 2/3. The death benefit amount would increase annually based on the cumulative changes in the CPI-W, STB, up to a maximum of 3% per year.
3. Combine options 1 and 2 above, by increasing the amount of the death benefit to $205,000 and apply an automatic CPI-based COLA on the new amount.

The Select Committee on Pension Policy will continue to discuss the development of legislative proposals on the various policy options that were presented. Although no decisions were made, there appeared to be no support for proposals that would result in increased costs.

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