At that time, retirees would be required to turn over their lump-sum annuity savings account to a private financial company if they wanted a lifetime monthly benefit to supplement their modest pension payments.
INPRS officials said longer life expectancies and a promised 7.5 percent interest rate made the state-managed annuity unsustainable in the long run and could lead to unfunded liabilities if the state's returns on annuity-backed investments dropped significantly.
Led by Tallian, the
The panel concluded that, even if INPRS reduced its annuity interest rates to market rates, the state-managed option remained superior because it is fee-free and not seeking to earn a profit like a private insurance or financial management company.
INPRS trustees rejected the commission's recommendation and unanimously voted in December to move forward with privatization.
House Bill 1075, cosponsored by Tallian and state Rep.
The legislation passed the House 83-0 and the
"We tried to get rid of privatization altogether, but the governor's office put the kibosh on that -- threatened to veto it," Tallian said. "We tried everything that we could."
In the end, the House,
The law permits INPRS trustees to privatize its annuity program starting
Tallian believes it was an good compromise.
She said while privatizing the annuities might have prompted many public employees to retire before the changeover -- potentially decimating the knowledge base of government offices due to an exodus of experienced workers -- the stepped-down interest rate should not significantly affect anyone's retirement income.
"I can't imagine that difference, standing by itself, would have forced somebody into retirement," she said. "It's still a good deal."
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