Senate rules committee advances four PERS-related bills, including proposal for hybrid "tier 5" retirement plan

The Mississippi Senate Rules Committee advanced four bills Feb. 4 addressing the Public Employees' Retirement System, members said, including a proposal to create a hybrid defined-benefit/defined-contribution “tier 5” for future state hires.

Senator Sparks, sponsor of the package and a PERS board member, told the committee the legislation is aimed at stabilizing PERS’s finances while protecting benefits for current employees and retirees. “Nothing in any of these proposed pieces of legislation changes or attempts to change any benefit to retirees including the cost of living adjustment,” Senator Sparks said. He also summarized the system’s finances: “We have assets of 34,400,000,000.0. We have an unfunded actuarial liability, net pension liability of 26,500,000,000.0. That's a funded percentage of 55.9.”

Why it matters: PERS pays roughly $3,400,000,000 a year in benefits and covers more than 154,000 active members and about 118,000 retirees and beneficiaries, according to statements to the committee. Lawmakers and the PERS board said the measures are intended to reduce contribution-rate risk and improve long-term funded status for future generations without altering benefits already earned.

Key actions and provisions

- Senate Bill 2863: The committee reported SB 2863 out of committee. The bill would permit Roth-style after-tax catch-up contributions to the state deferred-compensation program and would allow qualified domestic relations orders to reach deferred-compensation accounts for child support or alimony when appropriate. Senator Sparks described both changes as applying to the optional deferred-compensation program and not to the PERS defined-benefit stream of income.

- Senate Bill 2794: SB 2794, described as addressing employers’ settlement of net pension liability if they elect to leave PERS, was advanced with a committee amendment requiring written confirmation from the PERS board about the technical language (a “reverse repealer” amendment, as discussed on the record). Committee members agreed to add the amendment and the committee sub was reported.

- Senate Bill 2449 (ORP): SB 2449 would alter the Optional Retirement Program adopted in 1990. Senator Sparks said the bill would end ORP for new hires and cap the employer contribution for current ORP participants at 9%, with the remainder of the employer contribution routed toward the PERS unfunded liability. The committee reported a committee substitute for the bill.

- Senate Bill 2439 (proposed tier 5/hybrid plan): The committee reported a committee substitute for the bill creating a proposed “tier 5” hybrid retirement plan for future hires. Senator Sparks described the board-endorsed model as a hybrid in which employees would continue to have a 9% payroll contribution, with 4% going to a defined-benefit (DB) component and 5% to a defined-contribution (DC) account. Sparks said the DB would use an employee’s eight highest consecutive years for average compensation, provide 1% service credit per year, have an eight-year vesting period for the DB, and include portability for the DC portion. He said there would be no guaranteed cost-of-living adjustment (COLA) in the DB portion as drafted and that the PERS board’s motion endorsing the tier 5 proposal passed 9–1 at the December board meeting.

Committee votes and next steps

All four bills were advanced by voice vote; the record on the committee floor shows each bill was reported out of committee. Committee members repeatedly emphasized that the bills, as presented to the committee, do not change benefits for individuals already employed or retired and that final language and actuarial certifications remain to be completed before floor action.

Quotes and clarifications from the hearing

Senator Sparks summarized the DB/DC split for the proposed tier 5: “9% withdrawn from the employee's check. 4% of that goes into a defined benefit plan. 5% goes into a defined contribution plan.” He said the DC contribution would vest immediately and be portable; the DB component would be 1% per year based on the eight highest consecutive years of compensation.

Senators on the committee asked for written confirmation from the PERS board on technical language and actuarial findings before floor consideration. The hearing record shows committee members adding an amendment intended to produce that written confirmation prior to the bill reaching the Senate floor.

Context and constraints

Committee discussion repeatedly noted that the actuaries recommend a higher actuarially determined employer contribution (ADEC) than current statutory rates; Sparks said the ADEC recommendation is 26% compared with a statutory rate moving from 17.9% to 19.9%. Committee members also discussed the role of the Institutions of Higher Learning (IHL) and local employers who participate in PERS or ORP, and senators said they had begun outreach to those institutions but that some participant counts and individual ORP details remain to be consolidated. Senator Sparks said the currently scheduled effective date in draft language is July 2025 but indicated that could change if PERS staff requested more implementation time.

Ending

The bills proceed to further legislative steps after the committee reports; committee members said they expect additional actuarial certifications and final drafting before the measures reach the Senate floor.