House bill

Equable Institute Releases Retirement Security Policy Scores for Oklahoma House Bill 2486 as Passed in the House and Amended in the Senate

The Oklahoma House’s proposed changes to retirement benefits for members of Oklahoma’s public employee retirement system would negatively impact members’ overall retirement security, while the Senate’s amended bill would improve the comprehensive retirement income security

NEW YORK, April 25, 2022 /PRNewswire/ — The Equable Institute has released retirement security policy scores for House and Senate versions of Oklahoma House Bill 2486 (HB2486). Adopted by the House on March 28, 2022In an effort to improve employee recruitment, the bill proposes to reopen the defined-benefit retirement plan offered to members of the Oklahoma Public Employees Retirement System previously shut down in November 2015 for current members enrolled in the OPERS Defined Contribution Plan and all future new hires. Pending a vote in the Senate, the amended version of HB2486 would keep the current defined contribution plan open and increase contribution rates from a maximum of 7% for the employer to a maximum of 10% for the employer.

The current plan for OPERS members is serving members moderately well, scoring 72.7% of the points available on the Retirement Security Report Matrix. When assessing key metrics of retirement security, HB2486 (house) gets 37.5% available perk points overall, leading to an overall assessment that it would only “does not serve the members well.” HB2486 (Senate) scores 83.6% of available points, with a qualitative assessment of “serves members well.”

RETIREMENT SECURITY POLICY SCORE:
OKLAHOMA HOUSE BILL 2486, VERSIONS ADOPTED BY THE HOUSE AND AMENDED BY THE SENATE

OVERALL RETIREMENT BENEFIT SCORE

Current plan

HB2486 (House)

HB2486 (Senate)

72.7% of points available

37.5% points available

83.6%points available



GLOBAL EVALUATION

Current plan

HB2486 (House)

HB2486 (Senate)

Serves members moderately well

Does not serve members well

Serves members well





The Equable Institute has analyzed the proposed changes using its open source scoring methodology of Retirement Security Report measure the impact of benefit changes on current and future pension plan participants. The score takes into account whether the benefits would meet an income adequacy target (replacement of 70% of pre-retirement earnings), the availability of inflation protection, and the plan’s flexibility and mobility propose.

According to the analysis, workers enrolled in the plan proposed in HB2486 (House) would receive lower annual retirement incomes than the current plan, while the plan proposed in HB2486 (Senate) would result in higher incomes for all members. However, in exchange, the proposed House plan could provide inflation-adjusted benefits (in the future), while the Senate version would not.

Under HB 2486 (House), Mid-term workers (those with 10-20 years of service) will see the biggest declines in annual earnings (-$3,061 decrease in annual income, on average)while full-career workers (those with more than 20 years of service will see the smallest overall decrease in benefits if this plan is adopted (-$962 decrease in annual income, on average). Only workers who enter OPERS at age 40 and work for more than 20 years will see a positive change in the value of benefits under HB2486.

Under HB2486 (Senate), all workers would see a significant increase in their annual earnings. Full-career workers will experience the greatest increase (+$11,566 per year on average). Overall, mid-term and short-term workers will see their annual benefits increase by +$4,466 and +$1,711, respectively.

“There is certainly room to improve the value of pension plan benefits for current public employees in Oklahoma“, said the executive director of Equable Anthony Randazzo. “However, the version of HB2486 passed in the House would actually reduce the value of benefits for most if not all future members of the OPERS retirement system. While the version currently being considered in the Senate does not offer a choice of benefits that could expand the range of pathways to retirement income security for future OPERS members, it improves the status quo by increasing employer contribution rates.”

Full analysis and extended dashboards with distribution of benefits by worker category, seniority and entry age are available for both versions of HB2486 here. The existing plan’s Retirement Security Scorecard can be found in the Retirement Security Report Interactive Database. here.

KEY TO RATINGS

Qualitative score

Score range

Serves members well

75% to 100% of available perks score points

Serves members moderately well

50% to 74.99% of available perks score points

Does not serve members well

0% to 49.99% of available perks score points

ABOUT THESE SHEET MUSIC
These scores are based on the averages of 25-year-old entrants and 40-year-old entrants with average starting salaries. This analysis aims to measure the most important factors in measuring retirement income adequacy. It is reasonable to compare plan changes with the status quo, but the more fundamental question is whether a pension plan (existing benefits or proposed adjusted benefits) provides retirement income security for all participants. on a diet. These scores are based on a comparison with a standard benchmark for retirement income adequacy, but there are also other reasonable benchmarks. We have made additional graphics available at https://equable.org/oklahoma-house-bill-2486-retirement-security-policy-scores which show how the services offered meet different adequacy standards.

Although our scoring system is designed for maximum objectivity to highlight the material impact of policy changes, Equable does not publish retirement security scorecards for invoices for which we have provided a technical assistance to ensure the neutrality of our analysis and we do not endorse any particular retreat. plan design.

ABOUT THE EQUITABLE INSTITUTE
Equable Institute is a non-profit, bipartisan organization that works with stakeholders in the public pension system to solve complex pension funding problems with data-driven solutions. We exist to help public sector workers understand how their retirement systems can be improved and to help state and local governments find ways to both address threats to the stability of municipal finances and ensure the retirement security for all civil servants.

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SOURCE Equable Institute