The Oklahoma House approved legislation Tuesday that eliminates traditional pension benefits for newly hired state workers and replaces it with a 401(k)-style retirement plan.
The measure creates a defined contribution retirement system for state workers after November 2015. Workers hired prior to that time will keep their current defined benefit pension plan.
The measure's author, Republican Rep. Randy McDaniel of Edmond, says Oklahoma's pension system has an unfunded liability of $11 billion and that the state spent $823 million last year just to service that debt.
McDaniel said the new plan allows new employees added flexibility. But Democratic House members were not convinced the plan was a great idea, and say the change will place the retirement benefits of state workers at risk by forcing them to invest it.
House Minority Leader Scott Inman said after speaking with all parties involved, he was told they all oppose this proposed pension system. McDaniel says he’s not surprised to see opposition by state workers and others on the bill but said the bill addresses the areas of pensions that make the most sense.
“There is a benefit to both plans but I also believe in freedom and this bill provides that,” McDaniel said. “It allows employees to start young and accumulate assets.”
The bill passed 58 to 33 and now goes to the Senate for its consideration.
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