North Dakota pension bill would establish a defined contribution plan for new public employees and reduce long-term debt, according to the Reason Foundation.
Facing $1.8 billion in unfunded pension liabilities, and projections that the pension fund will be depleted within 80 years, North Dakota policymakers are seeking comprehensive reform of the North Dakota Public Employees Retirement System. The newly introduced House Bill 1040 would address many of the issues that have been plaguing the system for decades.
First, it would fix the state’s systematic funding deficiencies by switching from a statutory to an actuarial contribution policy. This would ensure that state and local governments are making the payments needed to fulfill all pension promises by a predetermined date.
Second, the reform would provide new hires, beginning in 2025, a defined contribution (DC) plan that meets a high standard of benefit design. Reason Foundation’s analysis of House Bill 1040 finds the proposed reforms would effectively halt the accrual of new unfunded liabilities with new hires, and would reduce long-term costs of the pension plan by responsibly paying down its legacy debt.
Originally published by Reason Foundation. Republished with permission.
Related article: “North Dakota Should Prioritize Paying Down Pension Debt.”
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