Certainly it will be important for all educators to pay close attention to SB 1750 and SB 1751. These bills were filed near the end of the bill filing period (the deadline was Friday, March 10) and both have to do with potential restructuring of both TRS and ERS (the state employee retirement system). The bills were filed by Sen. Paul Bettencourt, a vocal proponent of defined contribution pension plans.
TRS and ERS are both defined benefit plans. This means that the benefit amount a retiree receives is essentially guaranteed and contributions to the plan vary in order to ensure that plan members receive the specified – or defined - level of benefits. A defined contribution plan is the opposite – the contributions are specified, but the amount of benefits earned may vary. This is often described as a 401(k)-style plan. A hybrid plan incorporates elements of both of these, and/or potentially other pension types.
SB 1750 would require the State Pension Review Board to conduct a study addressing the cost-effectiveness and feasibility of a hybrid retirement plan for newly-hired state employees and teachers (combined), to be administered by either ERS or TRS and provided instead of the existing retirement plans.
SB 1751 allows TRS and ERS to create an alternative retirement plan (either a defined contribution or hybrid plan) for newly-hired employees.
Any effort to restructure TRS to a defined contribution or hybrid plan is unnecessary and could be disastrous for employees. (Don’t be comforted by the fact that the restructured plans discussed in these bills would only apply to new employees – your current TRS benefit relies on the contributions of everyone in the system, and removing future employees from the plan would seriously jeopardize your pension.)
TCTA does not believe that a majority of legislators at this time would support converting TRS to a defined contribution plan, and it is noteworthy that neither of these bills would actually requires restructuring. But even entertaining the option sends the message that restructuring TRS might have merit. We encourage our members to let their legislators know that they are opposed to SB 1750 and SB 1751, and believe that lawmakers should - instead of looking into changing a successful retirement plan - be working on how to make health insurance adequate, affordable and sustainable for active and retired school employees.