SB 641 401(k) separate accounts from PERS

This bill establish a new 401(k)-type retirement plan for new employees separating accounts from PERS. Employers contribute 10% to the account and employees have the option of contributing 2% to be matched by employer.

Personal Choice and Responsibility
Inadvertently provides a 6% pay raise by shifting contribution responsibility to employers.

Fiscal Responsibility
Reduces combined contributions from 12% to 10% to be contributed by employer – inadvertently giving employees a 6% raise. However, if the employee opts to contribute an additional 2%, the employer must match bringing the total contribution back to 12%. Requires employer contribution rate set by Public Employees Retirement Board, including employer contributions to individual account program, to be at least 18% of salary. The segregation of individual accounts limits available funds to cover the deficit, which may be a problem in the future before the deficit can be reduced. The major remaining problem of calculating retirement benefits is not addressed making this bill a whole lot of nothing in resolving future deficit buildup.

Limited Government
Directs board to recalculate employer contribution rates to reflect savings attributable to Act limited by the 18% of salary. Limiting employer contributions will not stop the deficit from growing. Provides for expedited review of Act by Supreme Court upon petition by adversely affected party.