Indiana proposes new retirement plan to boost employee retention

House Bill 1392, introduced in the Indiana House on March 25, 2025, aims to enhance the state's employee benefits system by promoting talent attraction and retention through improved retirement options. The bill proposes the establishment of a comprehensive plan that includes contributions from state revenue to the employees' deferred compensation plan, which is designed to bolster the financial security of state workers.

Key provisions of the bill mandate the inclusion of options for existing employees to continue contributions to their retirement medical benefits accounts, ensuring they have the choice to maintain these benefits. Additionally, the bill emphasizes the importance of financial and retirement literacy, requiring strategies to educate participants in the deferred compensation plan.

The bill is set to be reviewed by the interim study committee on pension management oversight by November 1, 2025, as part of its implementation process. Notably, the bill includes a sunset clause, expiring on July 1, 2026, which may prompt further legislative review and adjustments based on its effectiveness.

While the bill has garnered support for its focus on employee benefits, it has also sparked discussions regarding the financial implications for the state budget and the potential impact on taxpayer contributions. Critics express concerns about the sustainability of increased state revenue allocations to retirement plans, urging a careful examination of long-term fiscal responsibilities.

As Indiana continues to navigate workforce challenges, House Bill 1392 represents a significant step towards enhancing employee benefits, with potential implications for the state's ability to attract and retain skilled workers. The outcome of this bill could set a precedent for future legislative efforts aimed at improving public sector employment conditions in Indiana.