Declining PERF Enrollment, A Cause For Concern?

Read the original article source of this excerpt. on 08/24/2014 by Troy Kehoe

Pension withdrawals causing new concerns at Statehouse

A technicality in state law is permitting thousands of new Hoosier public workers to opt out of Indiana’s public pension plans, such as the Public Employee Retirement Fund [PERF], and seek alternatives in retirement planning.   This loophole has bolstered autonomy for Hoosiers who have entered the public employee workforce within the last year; however, it has also produced a plethora of unintended consequences.

Since 2013, PERF’s total enrollment has plunged 13 percent causing a $170 million deficit in promised payments –known as unfunded liabilities—for Hoosier public workers in or near retirement.   Indiana Public Retirement System Director, Steve Russo, estimates that on its current path, unfunded liabilities could balloon to as much as $512 million, effectively decimating PERF’s reserves.   The General Assembly’s Pension Management Oversight Commission is attempting to combat this shortfall by lowering the annuity rates of all public employees who retire after October 1, 2014, by as much as 20 percent.  Such a step will undoubtedly slow the bleeding, but will also likely be the first of many PERF revisions to come.