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Committee backs PERS "tier 5" hybrid plan for future hires and moves to end SLURP for new officeholders
Summary
Senator Sparks briefed the Rules Committee on a proposed fifth tier for the Public Employees' Retirement System: a hybrid model that would split the current 9 percent employee contribution into a 4 percent defined‑benefit portion and a 5 percent defined‑contribution portion, with portability, immediate DC vesting, an 8‑year DB vesting period, and
Senator Sundar Sparks presented a multi-part bill to the Rules Committee that would create a new PERS "tier 5" for future hires and, in the same legislation, terminate the Supplemental Legislative Retirement Program (SLURP) for future elected officials. Sparks said the package is not retroactive and would not change benefits for current employees or retirees.
Sparks said the PERS board adopted a motion at a December meeting endorsing a tier‑5 hybrid model, and he said the board vote on that motion was recorded as 9 to 1. He said PERS staff and actuaries have modeled a hybrid that they project will lessen the unfunded actuarial accrued liability’s growth for future hires and improve long‑term sustainability.
As described by Sparks, the proposal would keep the employee contribution at 9 percent of payroll, but would allocate that amount between a defined‑benefit (DB) component and a defined‑contribution (DC) component: 4 percent would fund the DB portion and 5 percent would fund the DC portion. Sparks described the DB calculation as based on a worker’s eight highest consecutive years of average earned compensation (rather than the current four highest), awarding 1 percent of service credit per year. He said DB vesting would occur after eight years and non‑reduced retirement would be available at 65 with eight years of service; he also described full unreduced retirement at age 62 with 30 years of service. Sparks said the DC portion would be immediately vested, portable, and similar to a 401(k)/deferred compensation account, with no mandatory employer match though employers could opt to match.
Sparks emphasized the proposed tier would have no guaranteed cost‑of‑living adjustment (COLA) in its DB formula as drafted and that the design choices were made to stabilize contributions and reduce contribution‑rate risk over time. He also said the sponsor intends to preserve military service credit provisions where appropriate.
On SLRP, Sparks proposed adding the relevant code sections to terminate the supplemental legislative retirement program for future officeholders; he said current participants would continue to have their benefits honored.
Committee members asked detailed questions about vesting, portability, COLA language and implementation timing. Sparks said he did not have final draft language for every provision at the committee hearing but that staff and actuaries were continuing to finalize language and that he would seek actuarial confirmation that the enacted language meets the board’s motion before floor consideration. The sponsor and other senators recorded an effective date in committee discussion of July 2025, subject to potential adjustment if PERS needs more time to implement.
Ending: The committee added the code‑section amendment for SLURP and passed the committee substitute for the tier‑5 bill; the transcript records committee passage (committee sub do pass). Sparks and committee members repeatedly emphasized the bills would not change benefits for current employees or retirees and that further drafting and actuarial certification would precede floor action.
