Committee orders study of Plan 3 and asks retiree groups for COLA proposals

Senator Conway, chair, asked staff to work with the Department of Retirement Systems to draft an outline for a study comparing Plan 3 and Plan 2 and to present that outline to the full committee in May.

The study idea was raised by a committee member, Catherine, who said the hybrid Plan 3 has been in place for about 30 years and that "it might be a good time to step back" and evaluate how Plan 3 is operating and how it compares to Plan 2. Catherine asked staff to examine retirement outcomes, typical retirement ages and benefit adequacy under each plan.

Committee staff agreed to scope the study. A staff member said the review would examine retirement outcomes and related data points—what ages members retire, how benefits compare and how deferred-compensation components interact with pension outcomes. The staff briefing will be intended as a scoping exercise; the committee discussed staging a deeper multi-interim review if needed.

Members also discussed cost-of-living adjustments (COLAs). Senator Conway noted a major fund flow anticipated after a system closure and reopening could put about $3.5 billion into a special fund in 2029, affecting longer-term possibilities for COLAs. He urged retiree organizations to bring formal proposals so the committee can evaluate requests in time to make recommendations for the October–November budget cycle. Member Hermanson and others emphasized the need for stakeholders to prepare concrete proposals and the committee instructed staff to include the COLA topic in the parking-lot items for future briefings.

The committee scheduled a set of interim briefings to support follow-up work: a May presentation on the draft study outline and a more detailed presentation on Plan 3 for the broader committee. The next steps are staff scoping, DRS coordination and a May presentation to confirm the study’s scope and timeline.