More retirees are collecting state benefits since 2009, even as the number of people contributing into the system has declined.
A joint Statehouse committee is mulling prospective policy changes to the state pension system, which grew in 2015 by approximately 30,000 retirees to 150,000. The number of state employees contributing to the plan declined by 6,000 people from 2009 to 2015.
The shift may be due partly to a reduced workforce after the economic recession of 2007 prompted budget cuts, according to Public Employee Benefit Authority executive director, Peggy Boykin.
Lawmakers met with PEBA and the Retirement System Investment Commission on Tuesday as they seek to close the gap on the retirement system’s shortfall. According to a 2015 report by the Legislative Audit Council, the pension plan could see a funding gap of up to $11 billion by 2043.
Approximately 10 percent of the state’s population relies on the state’s $26 billion retirement fund, which currently collects $2 billion in contributions and pays out $3 billion.
Additionally, the retirement system’s plan is underperforming, earning 4.66 percent annually over the past 10 years, compared to a national average of 5.66 percent, said RSIC CEO, Michael Hitchcock. The Legislature has set the rate of return at 7.5 percent.
Lawmakers approved in 2016 a .5 percent increase in the contributions into the system by state workers. That increase, which took effect in July, will draw into the plan $100 million from state workers and employers, said Boykin.
But liability still looms—even with the increase in contributions. The General Assembly will have to grapple in 2017 with contributing factors like payrolls not growing as expected and workers retiring early.