Trustees of the Arkansas Public Employees Retirement System last week asked lawmakers to lengthen to 30 years from 28 years the work span needed to qualify for full retirement benefits.
Gail Stone, executive director of the state pension system, said the change would save about $16 million a year. It would not affect current retirees or vested members of the 45,000-member pension system.
Stone said the revision would also reduce the likelihood that the retirement system would have to raise the rate charged to state and local governments from the current 13.47% of annual employee payroll
Trustees raised the rate from 12.46% of payroll in August to recover from a plummet in the value of the system’s investments to $4.3 billion at the end of fiscal 2009, a drop of $1.3 billion in a year. The increased rate costs Arkansas governments a total of $15 million a year.
Without the longer service term, governments in the system faced an increase in contributions to 14.9% in July 2012 and to 15.8% in July 2013.
Governments currently pay $170.1 million a year into the Arkansas retirement system, with $30.3 million contributed by employees.
A report from the system’s actuary, Gabriel, Roeder, Smith & Co., said the 45,380 active members had a total annual salary of $1.52 billion.
The pension system’s 23,961 retired members and survivors received $289 million in annual annuities in fiscal 2010. The unfunded liabilities of the system totaled $1.88 billion on June 30, the actuary said.