CARSON CITY — A Republican lawmaker said Monday that his bill to consider fundamental changes to the state public pension plan for new hires will not get a hearing after all.
Assemblyman Randy Kirner, R-Reno, said he is “seriously disappointed” that the Assembly Ways and Means Committee will not hear Assembly Bill 342 this session.
A hearing on the measure had been scheduled for earlier this month but was cancelled because some of those expected to testify could not make the date.
Kirner said the decision now is not to hear the bill at all.
The public pension plan change is one of several priority issues for Republican lawmakers this session that have so far failed to move forward.
Republicans are in the minority in both the Assembly and Senate.
Kirner said he requested the bill to start to get a handle on a long-term unfunded liability of the state Public Employees’ Retirement System that hit $11.2 billion as of June 30, 2012. The unfunded liability has grown by $1.2 billion over the past two years.
Kirner’s bill proposed to create a hybrid plan with a 6 percent contribution from public employers to the pension in the form of a defined benefit. The other piece would be a defined contribution plan with 6 percent coming from the employers and 6 percent from the employees for a total of 18 percent.
The bill also would have eliminated the ability to buy retirement years and set the retirement age for regular public workers at the same age as social security.
The current public pension plan is a defined benefit plan, where employees receive a guaranteed pension upon retirement based on salary and years of service. The plan has created a long-term and ongoing financial obligation on the part of the state and local government agencies to their employees.
Defined contribution plans have many similarities to the 401(k) retirement plans offered in the private sector. Their appeal is that they do not create any long-term financial obligations for the state or local governments.
Members of Nevada’s public pension plan do not participate in social security.
Kirner faced an uphill battle with the bill, however.
Many lawmakers oppose any changes to the existing retirement system, and officials that oversee the plan argue that the long-term liability will be funded over time.
GOP Gov. Brian Sandoval also opted not to pursue changes to the retirement plan this session, instead supporting an independent study of the fundamentals of the existing pension plan, a study not expected to be completed until after the legislative session is over.
Retirement contribution rates for the current plan are expected to rise to 25.75 percent of most public worker salaries in the upcoming budget, a 2 percent increase over current contribution rates. State employees pay half of the total contribution, but some local government employee groups don’t pay any at all as the result of collective bargaining agreements.
Nevada’s pension plan for about 100,000 active state and local government workers and more than 40,000 retirees was 85 percent fully funded in 2000, but was only 71 percent fully funded in 2012. The 2012 number was a slight improvement from the 70.2 percent reported in 2011.
Some critics of the current defined benefit public pension plans argue the unfunded liabilities are under-reported because they reflect an unreasonable anticipated rate of return on investments in stocks and bonds.
Contact reporter Sean Whaley at firstname.lastname@example.org or 775-687-3900.