Fully Fund the Pension Liabilities for Employees and Retirees
Previous Oklahoma legislatures failed to fund the state's pension plans by refusing to contribute the required obligations to state workers and in doing so put the entire system at risk. This poor policy decision, in addition to the costly recession of 2008, created the situation Oklahoma finds itself in today.
Oklahoma should fully fund our required contribution to the pension system annually and keep its current promises to our great state employees. Strong financial stewardship and guaranteed state and employee contributions will maintain the benefits earned by employees in addition, portability of plans will ensure state workers don't lose accrued benefits should they decide to leave employment at any time.
Move Oklahoma to a Modern Pension Plan
Oklahoma currently faces an unfunded pension liability of more than $11.5 billion. That amounts to about $3,000 for every man, woman and child in Oklahoma. Additionally, the current pension system is so costly, it’s preventing pay increases for state employees including teachers, firefighters and police officers.
The system also prevents younger state employees from being flexible and mobile in their retirement planning, often preventing the best and brightest employees from continuing state employment.
By moving Oklahoma to a defined contribution-style pension system for new employees, the state can finally put a hard cap on the problem of future liabilities. A defined contribution-style plan would define the state’s liability every year, ending the practice of putting off today’s problems for tomorrow.
Younger workers would be given the option to move their retirement plan as they move and would not be punished in the event their life changes. They would have a more solid basis for planning their retirement and would not have to face the worry of their pension being underfunded or subject to the whims of politicians.
Stop the Pension Debt
Oklahoma currently funds state employee pensions on an arcane and opaque funding formula that requires the state to estimate: length of service, life expectancy, highest salary and investment return for every state employee, often 60 years in advance of the liability.
The result has been a consistent underfunding of the state’s pension liability, putting the retirement of state employees and taxpayers on the hook.
Oklahoma should define, in statute, the required contribution the state makes per year. By moving to a defined contribution-style plan, the state can know future liabilities today and ensure future generations aren’t put at risk.
Oklahoma is going to have to own up to its pension liabilities eventually, and by planning for it now and making our actuarially required annual contributions, we can avoid the potential for a future pension disaster.