Missouri Gov. Jay Nixon on Monday signed reform legislation that will require new state employees to contribute to their retirement fund and to work longer before collecting their pensions.
The reforms — approved during a special legislative session that ended last week — are expected to save more than $660 million over the next 10 years.
Employees hired next year will be required to contribute 4% of their salary towards their pension and to work 10 years before collecting a pension, up from the current five years. The retirement age was also lifted to 67 from 62.
“These reforms will help ensure that Missouri’s state employee pension system remains solvent for years to come, helping us avoid the pension crises other states are experiencing,” Nixon said.
The savings helped win over lawmakers concerned over passing separate legislation that provides up to $150 million in tax incentives for Ford Motor Co. and its suppliers and other automotive companies. Nixon, a Democrat, last week signed the legislation known as the Missouri Automotive Manufacturing Jobs Act.
The governor called lawmakers back to work late last month to push for passage of the bill, which provides incentives to Ford if its keeps the Claycomo plant in the Kansas City area open after production of the Ford Escape is relocated next year to Louisville, Ky., as reported.
The legislation allows Ford to keep up to $100 million of withholding taxes over the next decade if it establishes a new product line with another $50 million of incentives offered to suppliers and other automotive companies.