Beginning next year, newly hired state employees could see some changes to their retirement benefits. The plan is to save the state $5 billion dollars over the next three decades.
Governor Robert Bentley was joined by state lawmakers and the head of the Retirement Systems of Alabama, Dr. David Bronner, at a news conference announcing the plan.
"If we choose to do nothing, then one of two things will happen, either we'll have to dramatically cut back on benefits or they'll have to be a tax increase on the people of Alabama," said Rep.Mike Hubbard, R-Auburn and Speaker of the House. "Both of those are completely unacceptable."
Under the proposal, new employees would see their benefits and eligibility change starting next year.
The plan sets a minimum retirement age of 62 for most state employees and 56 for those who work in law enforcement. Under the current system, employees can retire at 60 if they pay into the system for 10 years. Any employee can retire at any age after serving a total of 25 years.
The plan also adjusts pension payments from an average of the highest-paid 3 years out of the last 10 years of service to an average of the highest 5 years. That would reduce the benefits paid, so the workers covered under the revised plan would contribute only 6% instead of 7.5% for current workers.
Leaders stressed the plan only applies to employees hired in 2013. There would be no changes for current workers and retirees.
"We believe these changes are fair, we believe they are responsible and we believe they are in the best interest of the pension system," said Governor Robert Bentley.
"38 other states have had similar problems to Alabama in dealing with these long-term pension plans," said Sen. Del Marsh, R-Anniston and Senate President Pro Tem. "This is a responsible way to deal with it."
Lawmakers said they've been negotiating this plan with the RSA for months, and they're confident it will pass both chambers in the State House without changes.
"This is like a huge web," Dr. Bronner said. "If you think I can do a little better over there to tweak it, the whole web sort of falls down."
The plan is expected to be introduced in the House and Senate on Thursday.
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