Board to meet to discuss changes for Ind. retirees

The Indiana Public Retirement System Board of Trustees meets in Indianapolis today to discuss moving their start date from July 1 to Aug. 1, 2014,  regarding recent changes implemented for retiring Hoosiers.

The board previously voted on changes that will impact how much new retirees will be eligible to earn from their annuity savings accounts. Under the state’s current defined benefit pension plan, people who work a certain amount of years receive monthly payments by the state once they retire.

Jeff Hutson, spokesman for the INPRS, said the state’s retirement system operates under a hybrid plan. This involves the use of an annuity savings account, where 3 percent of a member’s wages go.

When a worker retires they must then decide what to do with their ASA
money.

Hutson said a person could annuitize it, roll it over into another investment or take a lump sum distribution to use for personal expenses.

Only half of retirees in the state annuitize their money into monthly payments, but the state also takes into consideration how long a person is expected to live. This way, the INPRS knows how much they’re paying out and how much they will earn, Hutson said.

Hutson said retirees are allowed to return a lump sum amount earned over their time working to their pension fund. This guarantees monthly payouts based on 7.5 percent of that lump sum.

The changes implemented by the INPRS, however, would call for a lesser percentage.
Although these changes could cost future-retiring employees, Hutson said they were necessary by the state.

“Without these changes, we face a loss of up to 300 million dollars,” Hutson said.
Hutson said the employees who will face the most repercussions from this are those in the public sector, primarily school teachers.

Gail Zeheralis, director of government relations for the Indiana State Teachers Association, said this wouldn’t only affect teachers, but also employers who work in the school system, such as school bus drivers and cafeteria workers.

The board of trustees is contemplating pushing the start date back in order to accommodate the school year. Because most state schools don’t dismiss for summer until June, moving the start to August would prevent teachers from having to retire earlier.

The ISTA is currently working on plans to help accommodate those who plan on retiring in the near future.

“Since the implementation date is not until next summer, we’re certainly going to work and try to provide some insight to the board’s changes,”
Zeheralis said.

Follow reporter Brett Frieman on Twitter @brttfrmn.