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Pension deal clears Senate

Post by Jordan Schrader / The News Tribune on April 10, 2012 at 6:32 pm with No Comments »
April 11, 2012 3:29 am

A measure just approved in the state Senate by a vote of 27-21 would scale back early-retirement benefits for future government workers and save state and local governments $1.3 billion over 25 years, about half of what Republicans had proposed.

The proposal was negotiated between the parties and could remove one of the last stumbling blocks to passing a budget.

Majority Senate Democrats left Republicans to do the heavy lifting. Just seven Democrats supported it, joining all but two Republicans, Don Benton and Pam Roach. One opponent, Sen. Steve Conway, D-Tacoma, argued it would encourage future government workers to go to other states.

But Democratic Sen. Jim Kastama of Puyallup, who supported it, said government workers who retire early are still getting “a good deal” in which other workers subsidize their benefits.

A retiring worker’s pension benefit would be cut by 5 percent for each year they retire before 65, up to age 55. So a civil servant who retires at 55 after 30 years of work would lose 50 percent of his or her benefit.

Right now, they lose 20 percent at the earliest possible retirement. Republicans had called for a 63 percent cut by eliminating two special early-retirement boosts passed over the last dozen years, so the bill strikes a middle ground.

It also delays the change until May 1, 2013.

The measure includes at least one other key piece: Lawmakers would write into law a more conservative estimate of pension funds’ investment earnings. The forecast of the rate of return would gradually drop from 8 percent to 7.7 percent.

A pension committee had called for an even lower projection, but if it had been left to set the rate, it would have been in a state rule, not cemented in law.

UPDATE: The bill passed the House 56-42 and heads to the governor for her signature.

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