INDIANAPOLIS | A plan to privatize a portion of state and local government employee retirement benefits got a skeptical second look Monday by the General Assembly's Pension Management Oversight Committee.
Trustees of the Indiana Public Retirement System, also known as INPRS, agreed in July to eliminate by July 1, 2014, the state-managed retirement annuity option for new retirees, and require them to turn over their lump-sum annuity savings account to a private financial company if they want an additional lifetime monthly benefit.
INPRS believes longer life expectancies and a promised 7.5 percent interest rate makes the state-managed annuity unsustainable in the long run. The change does not affect the modest defined benefit also paid to retired public employees.
State Sen. Karen Tallian, D-Ogden Dunes, said there's no need to privatize the annuity option.
She said INPRS should just adjust the state-run annuity program to ensure solvency and avoid putting retirees at the mercy of for-profit financial companies that are liable to charge higher fees while reducing payments to beneficiaries.
"We don't see any reason or necessity why we need to privatize this," Tallian said. "We have other options."
Tallian said she will recommend the committee's final report to the Legislature and urge INPRS to reconsider its privatization decision.
She hinted if INPRS stands by its plan, the General Assembly could override that decision before it takes effect with new laws during the 2014 legislative session that begins in January.