INDIANAPOLIS | State lawmakers took a first step Tuesday toward halting a plan to privatize the supplemental annuity payment available to retired state and local government employees, including teachers.
House Bill 1075, prohibiting the Indiana Public Retirement System, INPRS, from contracting with a third-party annuity provider prior to Oct. 1, 2019, was unanimously approved by the House pensions committee and now goes to Ways and Means Committee for further review.
State Rep. Chuck Moseley, D-Portage, a member of the committee, said privatizing annuity sales would make it harder for retirees to know how much money they'd have to live on.
"We have no knowledge, we have no ability to know, currently, based on information that INPRS can provide, of what the costs are going to be if they do privatize it," Moseley said. "No one has been able to provide me with a schedule of fees, whether it be on the front-end or going forward in year two, three, four, five."
Retired INPRS members receive a modest monthly pension payment that can be supplemented by converting their retirement savings account into an INPRS-administered annuity that pays a 7.5 percent interest rate, well above current market rates.
The committee changed the legislation to allow INPRS to reduce that interest rate to match its expected rate of investment return.
INPRS trustees claim keeping the annuity program in-house, even at a reduced interest rate, still could lead to unfunded liabilities.
They've been working toward an Oct. 1, 2014, start date for annuity privatization, but have said they will follow the law if the Legislature prohibits transferring the program to a third-party provider.