Governor Robert Bentley on Tuesday praised Senate approval of pension reform measures that will ensure the viability of the state's retirement system while also saving taxpayers more than five billion dollars over 30 years.
"The measures approved by the Senate today protect the retirements of hard-working Alabamians while ensuring a strong retirement system for future employees," Governor Bentley said. "These changes will only affect new hires who begin their employment next year. The changes are fair, they uphold our commitments to current employees, and they provide a solid retirement for future employees as well."
Governor Bentley joined with legislative leadership and Retirement Systems of Alabama Chief Executive Officer Dr. David Bronner in March to outline proposed revisions.
Senator Arthur Orr served as the Senate sponsor of the legislation -- Senate Bill 388.
"By enacting these common-sense reforms, we can ensure the long-term solvency of our retirement system and that taxpayer resources are spent responsibly," Senator Orr said. "This allows us to honor the commitments we made to our hard-working teachers and state employees through their participation in state retirement programs. I especially want to thank Dr. Bronner for his commitment to the long-term solvency of the retirement programs and Governor Bentley for his leadership in making sure this issue is addressed in a sensible way."
Proposed changes include:
A minimum retirement age of 62 for most state employees.
Currently, anyone may retire once vested (10 years of service) at age 60 or with 25 years of service at any age. The reform proposals set a minimum retirement age of 62.
Law Enforcement -- Minimum retirement age of 56.
Adjust pension payments from an average of the highest-paid 3 years out of the last 10 years of service to an average of the highest 5 years.
In exchange for the restructuring of benefits, new hires would see their employee contribution rates changed from 7.5% to 6.0% (7.0% for law enforcement, firefighters, and corrections employees). This measure will increase employees' take-home pay.
Total estimated savings over 30 years: $5.03 Billion
Average annual savings over 30 years: $162 Million
The bill now moves to the House for consideration.