By Susan Britt
Alabama Political Reporter
MONTGOMERY–On Tuesday, a bill restructuring retirement for teachers and state employees received final passage on the Senate Floor with a vote of 25-8.
Senate Bill 388 establishes a new defined benefit plan for employees who become a member on or before January 1, 2013.
New general state employees and teachers would have a waiting period to receive retirement benefits requiring that they would not be able to receive checks until the age of 62. Retirement after 25 years of service would still be available to be eligible for the benefit.
Requirements for new firefighters, law enforcement or corrections officers say that the employee has to be 56 years of age with a minimum of 10 years service to quailfy.
Senator Arthur Orr (R-Decatur), bill sponsor, said that with people’s life expectancy growing older every day, the state can not afford long term retirement pay outs. Under the current law, teachers as young as 40 years old are able to retire with full benefits and begin to draw their checks.
“[The years they draw retirement] could exceed the amount of time that they worked for the state,” said Senator Orr. “That system is unsustainable unless we keep raising the employee contribution. Our budgets cannot afford to keep receiving demands from the retirement system to fund it.”
As many as 40 other states are amending their state employee retirement funds taking longer life-expectancy into consideration.
Dr. David Bronner, CEO of the Alabama Retirement Systems, said, “What it basically does is it puts Alabama in line with about 40 other states relative to their future employees.”
Senator Orr estimates that this change to the retirement plan will save the state of Alabama an estimated $5 billion over the next 30 years.
“This is a significant step for the state and the retirement system in the long term. Longterm security and stability for our retirement system,” said Senator Orr.
Dr. Bronner said, “I have been supportive of it since the beginning so I feel good about it. I mean we will just have to see what happens in the House, if there are any substantial changes made to it. That is the key.”
The bill now moves to the House for assignment to committee.