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PERS proposes participant fee to fund deferred‑comp administration; bill would stop current FICA redirect and reserve transfers
Summary
House Bill 1113 would authorize the Public Employees Retirement System to charge participants a quarterly administrative fee to fund the 457 deferred compensation plan, replacing the current mix of redirected FICA savings and transfers from other reserves; PERS projects about $10 per participant per quarter.
House Bill 1113 would change how administrative expenses for the NDPERS 457 deferred compensation plan are funded. Derek O'Brien (Derek Hobine in testimony), Chief Operating and Financial Officer for NDPERS, told the House Government and Veterans Affairs Committee the current funding mechanism is convoluted and relies on employer FICA savings from a separate FlexComp program plus transfers from health insurance reserves and occasional draws from the main defined‑benefit plan. That mechanism was established when the plan began in 1989, O'Brien said, and will not be sustainable now that the main defined‑benefit plan is closed to new hires.
O'Brien said the plan serves roughly 11,000 participants and requires about 4.85 full‑time equivalents to administer operations. He provided a breakdown of administrative costs (approximately 53% personnel, 19% consulting/legal, 18% technology, 6% equipment/rent) and noted expected spikes in fiscal 2024–25 tied to programming changes required after the DB closure to implement matching provisions for the DC plans.
HB1113 would allow PERS to charge plan participants a quarterly administrative fee instead of relying on redirected employer FICA savings and ad hoc transfers. The draft estimates a per‑participant fee of about $10 per quarter. O'Brien said the change would shift costs directly to the participants of the program and remove the practice of pulling several million dollars over time from the main retirement plan — money that otherwise could be applied to unfunded liabilities. Employee Benefits gave the bill a favorable interim recommendation; PERS staff said the change would not increase state general fund costs and could lay the groundwork for consolidating certain FlexComp administration and saving money for employers in the long term.
The committee heard no opposition testimony at the hearing and closed the bill with no immediate vote recorded.
If enacted, HB1113 would standardize funding for deferred compensation administration and reduce transfers from other PERS accounts by charging the beneficiaries of the service a modest, transparent fee.
