June 4, 2014

House committee passes pension reform bill

The legislation would shift the cost of late, large pension increases for well-paid officials to the government agencies they work for, sparing the pension system.

A House bill intended to prevent the pension system from picking up the cost of pension-spiking by well-paid state and local officials passed its first committee vote Wednesday with little debate and no opposition.

House Bill 1195 was filed last week to curb the kind of pension increases revealed in a recent News & Observer series, Checks Without Balances, that showed how four community college presidents were able to boost their pensions by getting their boards to convert housing allowances, annuity payments and other perks into salary as they neared retirement. One of the presidents could see his pension grow by an additional $52,000 a year by converting accrued perks.

The legislation sets a cap on pensions for those employees making $100,000 or more by calculating how much they had paid into the system plus interest typically earned on those contributions. Any amount over that would have to be paid by the state or local government agency that employee worked for. The pension system would no longer subsidize that cost.

“They are free to do it if they want to,” said Rep. Jeff Collins, a Rocky Mount Republican. “They just have to ante up the money to do it.”

The bill also returns the vesting period for state employees and teachers to join the pension system from 10 years to five years, and allows state and local employees who leave before they become vested in the system to collect their contributions plus interest.

The bill passed the House State Personnel Committee by unanimous vote and was sent to the House Appropriations Committee. Since this is the legislature’s short session, rules may require the bill to be included as a provision in the final budget to become law.

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