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State treasurer adds voice in opposition to pension changes that could put more workers in 401(k)-style plans

Post by Brad Shannon / The Olympian on March 22, 2013 at 3:50 pm | No Comments »
March 22, 2013 3:58 pm
Treasurer Jim McIntire
Treasurer Jim McIntire
bailey
Sen. Barbara Bailey

State Treasurer Jim McIntire is lining up with many of his fellow Democrats in opposition to a Senate plan to alter Washington’s state-government pensions. McIntire voiced his opposition to using a 401(k) or defined contribution plan in an op-ed column Friday in the Seattle Times.

One proposal from Republican Sen. Barbara Bailey is voluntary, letting new state hires opt in if they prefer to go to the more flexible approach that offers fewer guarantees in old age. But McIntire argues there is no problem to solve and that employees are not demanding the new option:

If implemented, this solution in search of a problem would undermine one of the nation’s most successful public pension systems, expose taxpayers to higher costs and create future unfunded liabilities.

Indeed, for more than a decade Washington has already let new hires opt into a Plan 3 hybrid plan that is one-half defined benefit and one-half defined contribution. Most don’t opt for it, McIntire says.

But members of the Republican-dominated Senate Majority Coalition Caucus want to align public employee benefits more closely with the private sector, where defined benefit plans giving fixed pensions are becoming less common.

Democratic Sen. Rodney Tom of Medina leads the caucus and his proposal (Senate Bill 5856), which got heavily criticized during a hearing,  steers all employees age 45 or younger into the 401(k)-style pensions. The bill  died at cutoff after getting a hearing but no vote in the Senate Ways and Means Committee.

The other proposal from Bailey, a first-year senator from Oak Harbor, would be entirely voluntary. Her plan (SB 5851) cleared the Senate Ways and Means Committee and awaits further action in the Senate.

Democratic Sen. Steve Conway of Tacoma wants to amend Bailey’s proposal to require a study by a legislative pension committee.

Conservatives have been making the case for a change in the state pension set-up, including the Washington Research Council – which has arguments here and here.  And Tom has complained that most private sector workers do not have the kind of fixed-pension benefits that government workers do, which he thinks is creating resentment or tension with voters.

In an interview, Tom painted pension reform as a potential trading card for support of new revenues for K-12 schools.

How far pension reform goes this year is still unclear. McIntire said in an interview that because the pension bills are linked to the state budget they are not truly dead and could still be passed.

Indeed, the Washington Federation of State Employees continues to monitor pension bills.

But the House, which is controlled by Democrats, has showed very little enthusiasm for the pension overhauls. House leaders have noted reforms passed in previous sessions to reduce state costs for pensions, including an end to automatic cost-of-living pay increases.

House Majority Leader Pat Sullivan, D-Covington, said earlier in the legislative session that there was not interest in doing further reforms to reforms.

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