(Host) State Treasurer Jeb Spaulding says the state’s public pension system needs to be reformed, and he’s optimistic that can be accomplished this year.
In the next decade, the state employees and Vermont teachers’ pensions could fall short by a billion dollars.
VPR’s Bob Kinzel reports.
(Kinzel) There’s a lot of pressure these days on the state’s two major retirement funds.
They’ve lost a lot of value during the recession and the demand for their services is increasing. Over the next 5 years, 25 percent of all state employees and teachers will be eligible to retire.
A special commission chaired by State Treasurer Jeb Spaulding has proposed a number of changes to the pension system in an effort to avoid a major budget crisis.
Speaking on VPR’s Vermont Edition, Spaulding said a failure to deal with this issue could seriously jeopardize the future health of the retirement funds:
(Spaulding) "If we want to have good strong retirement plans for the future we need to take action to put them into a sustainable mode now. The longer we wait the more difficult it will become."
(Kinzel) Spaulding’s commission is recommending several changes including a higher retirement age and larger employee contributions to the pension funds. The changes wouldn’t affect employees who are within 5 years of retirement.
Joel Cook is the executive director of Vermont NEA – the state’s teachers union. He says another key factor in this issue is the chronic under funding of the retirement funds by lawmakers over the past 20 years.
That’s why he opposes efforts to solve this problem primarily by making adjustments to the pension programs:
(Cook) "The pattern of underfunding of the teachers system is really a significant contributor to the overall present problem and so as we get into thinking about what solutions are, we ought to think about the causes as well."
(Kinzel) The two sides are meeting privately in an effort to find a compromise. Spaulding says he’s hopeful that this effort will be successful:
(Spaulding) "My hope is that there will be a meeting of the minds and probably the recommendations of the commission will be moderated somewhat. But it will actually increase significantly the ability that we will be able to maintain these retirement plans going forward."
(Kinzel) And Cook says some adjustments to employee contributions could be part of a final deal:
(Cook) "That’s one of the items under discussion, sure."
(Kinzel) Any reform of the state’s retirement programs will have to be approved by lawmakers.
For VPR News, I’m Bob Kinzel in Montpelier.