Vermont blogger John Walters posted a piece Wednesday on the Speaker’s pension proposal, and, in it, he highlights some of the elements (that’s putting it nicely) contained in the proposal. These include:
A one-time additional state payment of $150 million. That’s over and above the actuarially recommended payment for this year. But no commitment to additional payments in the future. (The combined shortfall of the state employees’ and teachers’ pension funds is around $3 billion.)
The changes to retirement benefits would not apply to current retirees or those within five years of retirement eligibility. This is even more draconian than the proposal floated by Treasurer Beth Pearce, who suggested applying the new plan only to future hires.
A new restriction on cost of living adjustments. Currently, COLA applies to a retiree’s entire pension. Under the new plan, COLA would only apply to the first $24,000 of each pension.
The standard for salary years considered when calculating the value of a pension would get tougher. Currently, it’s based on an average of the three highest consecutive annual salaries for a beneficiary. Under the new plan, it would be seven consecutive years. In the vast majority of cases, this would reduce the value of a retiree’s pension.
The required vesting period for an employee to qualify for a pension would double, from five years to 10.
Most employees would see significant increases in their payroll deductions for their pension plans.
Retirement eligibility ages would rise for virtually all employees. The new standard for almost everyone would be Social Security’s full retirement age.
Employees would be put at risk for future shortfalls in the funds. They could see their payroll deductions increase, and COLA adjustments decrease.