Monday, October 21, 2013

Course Change on Annuity Accounts

October 21, 2013

Dear ISTA Members,

We want you to know that today's meeting of the Pension Management and Oversight Commission (PMOC) went well. Much of what happened today is the direct response to your thoughtful communications with members of the Commission.

Today, PMOC members sent a unanimous message about the direction it supports - not to privatize this annuity work but, instead, to find a better balance between what INPRS believes it needs and the needs of its members.

Today's motion from the Commission's final report reads:
  1. The Commission considered the four proposals considered by the INPRS Board regarding the issuance of annuities to retirees for their ASAs.
  2. The Commission recommends that INPRS pursue an option that would keep the annuitization of ASAs in-house and to not proceed with a 3rd party contract. Instead INPRS should periodically establish an interest rate that will not create an unfunded liability in their managed funds.
  3. The Commission recommends the General Assembly not set a statutory interest rate at this time.
  4. The Commission recommends that the date to undertake these activities occur not earlier than October 1, 2014.
Basically, the recommendation calls for NO PRIVATIZATION and that INPRS continue to annuitize in-house in a way that will not create an imbalance between what INPRS promises and what it can earn in investments.

This is a "non-binding" recommendation, but carries weight inasmuch as PMOC oversees the work of INPRS. INPRS will meet this Friday and it is hoped that INPRS will take new action to reflect PMOC's recommendations.

The reason for the Oct. 1, 2014 implementation date is to ensure that school employees interested in retiring next summer can do so under the current retirement system.

ISTA will continue to work to make positive impacts on behalf of members. Please stay tuned. We will keep you informed.

Please take time to thank Sen. Karen Tallian for her leadership on this issue and for offering her motion. Also, take time to thank the other legislative members of PMOC for voting for it.

Chairperson: Sen. Phil Boots (R-Crawfordsville):
Sen. Gregory Walker (R-Columbus);
Sen. Karen Tallian (D-Portage);
Sen. Lindel Hume (D-Princeton);
Rep. Jeff Thompson (R-Lizton);
Rep. Woody Burton (R-Whiteland);
Rep. Chuck Moseley (D-Portage);
Rep. David Niezgodski (D-South Bend);

ISTA knows this is a high-interest topic and will continue to hold its retirement workshops around the state as originally scheduled.

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