The defined benefit pension plan I am proposing has the potential to strengthen existing pensions while providing new options. It functionally works very much like a traditional 401(k).
House Bill 1463 would allow new educators coming into the school systems around the state to choose a defined contribution retirement plan in lieu of the current defined benefit plan teachers have for retirement. This piece of legislation gives educators the chance to choose how to prepare for their future. If passed, my proposal will give teachers an alternative retirement plan and allow them to change their minds within their first three years of employment.
This bill has an opt-in provision, meaning if a new teacher doesn’t make a selection the default will be the current defined benefit pension. Furthermore, the teachers who do choose this new pension plan would have a three-year window to change back to the old plan.
Based on my experience as a financial adviser, I believe this defined contribution plan can provide an option that would benefit some new teachers. The contribution from the employer, that normally funds the defined benefit will be deposited in the employees defined benefit account.
This specific retirement plan I am proposing isn’t available through TRF, but currently PERF offers a similar choice for their members. Since it started in 2013, 10 percent of new PERF employees have opted for the defined contribution plan. It is time we offer our teachers more options for retirement as we have already done for our other state employees.
As I work on this proposal and other issues facing our community, please contact me with any questions or input at 317-232-9643 or email at email@example.com. Learn more about the work being done at the Statehouse by signing up to receive my email updates at www.in.gov/h81.
State Rep. Martin Carbaugh (R-Fort Wayne) represents House District 81, which includes portions of Allen County.