Wednesday, March 28, 2007

Montana House panel kills new Public Employee Retirement Plan

The Billings Gazette reports a proposed 401(k) retirement plan is dead on arrival at a House committee.

A House panel Tuesday killed a bill to create a new, 401(k)-like retirement plan for new government employees and teachers in Montana, but committee members said they may want to study the issue further in the next 20 months.

The 48-page bill would have set up a "defined contribution" pension plan for new state employees and teachers, allowing them to contribute a portion of their own salary to a fund and choose where to invest it. It would not guarantee any specific pension benefit.

Public employees and teachers currently have a "defined benefit plan," under which they and their employer - the government - pay a percentage of their salary into the retirement fund. Workers receive a set pension amount, based on a percentage of their final salary.

Pension funds covering 100,000 teachers, public employees and retirees in Montana are facing long-term deficits of about $540 million. The Legislature is considering separate bills to bail out the systems.