A bill introduced this month would modernize Georgia teachers’ pensions to be more in line with private-sector retirement plans. The proposal is modeled after the successful reform of Georgia’s pension plan for new state employees 7 years ago.
Senate Bill 152, sponsored by Sen. Hunter Hill, would only apply to teachers hired after January 1, 2017. These newly hired teachers would automatically be enrolled in a hybrid pension plan that combines a defined contribution plan, similar to a 401(k) plan, with a smaller traditional defined benefit component.
This is exactly what happened with state employees in 2008 in response to a survey showing that state employees under age 30 earning less than $35,000 annually – who made up the majority of Georgia’s public workforce in 2008 – were dissatisfied with their current retirement plan. They valued current salary higher than deferred benefits, and were concerned about the lack of portability of their defined benefit plan.
The General Assembly passed a bill that shifted all employees hired after January 1, 2009 into a hybrid plan, while current participants in the state employees’ retirement plan were allowed to choose to join the hybrid plan at any time.
SB 152 would allow current Teachers Retirement System member to choose to join the hybrid plan or stay with their existing defined benefit plan. The Georgia General Assembly does not allow retirement legislation to be passed in the same legislative session in which it is introduced, so final approval must wait until the 2016 session.
For more information, read the Pension Reform chapter of our 2014 “Guide to the Issues.”