PERS clarifying bill would let more local governments join new defined‑contribution plan, staff say changes are administrative
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Summary
House Bill 1146 would allow additional political subdivisions to join the new PERS defined contribution plan, clarify which state entities are responsible for actuarially determined employer contributions and provide related technical fixes to implement last session’s pension transition.
House Bill 1146, presented Jan. 17 by House leadership, would adjust implementation details of last session’s pension reform (House Bill 1040) that closed the main defined benefit plan to new hires and established a new defined contribution plan.
Leader Mike Lefor said the bill would allow political subdivisions not currently on the PERS plan an avenue to join the new defined contribution plan; the sponsor said offering the plan to more employers can lower per‑participant administrative costs and increase portability for employees who move between employers.
Derek Holbein, chief operating and financial officer for the North Dakota Public Employees Retirement System, testified in a neutral capacity and described several technical clarifications: sections that identify which state employers receive their budgets through the legislative assembly (and therefore will be responsible for paying the actuarially determined employer contribution, or ADEC); a retroactive emergency clause to ensure the correct employers and members are included in the special election window that runs Jan. 1–Mar. 31, 2025; and clarification about required annuity options. Holbein said the bill would change the word "must" to "may" for out‑of‑plan annuity requirements to preserve the board’s flexibility while the new plan is small.
Fiscal impact and ADEC: Holbein explained the ADEC is the biennial employer contribution required to amortize the legacy plan’s unfunded liability (about $1.9 billion) by 2056. Excluding 21 employers from the base used to calculate the ADEC would shift roughly $1.3 million in employer costs to other funding sources; Holbein said the fiscal note provides an agency‑by‑agency breakdown of that impact.
Committee comments and next steps: Members asked which employers and employee counts would be affected; the PERS submission included a list of affected entities and employee counts. Holbein and Lefor asked the committee to consider the bill as a necessary technical cleanup to implement HB 1040 and to support a "due pass" recommendation.
Ending: The hearing closed with neutral agency testimony and an invitation for the committee to weigh policy tradeoffs; no final vote on the bill was recorded in the hearing.