Utah Legislature: State workers' 401k could be cut

SALT LAKE CITY — The one piece of state retirement system reform legislation that affects current employees is a "minor token" that is not critical, the sponsor said Monday.

"It's just a financing option," Sen. Dan Liljenquist, R-Bountiful, said of his bill to eliminate a 1.5 percent 401(k) retirement plan contribution made for most state employees.

That bill, SB94, would save the state about $21 million annually, a "minor token" toward the amount needed to cover a $6.5 billion shortfall in the state's retirement system.

"That is not key to pension reform," he said. "It's not critical, but it is a tool used by others," including Salt Lake County. The county suspended 401(k) contributions as a cost-cutting measure, as have private companies.

Liljenquist, chairman of the Senate Retirement and Independent Entities Committee, said he is counting on two other bills to help restore money lost in the 2008 economic crisis.

SB63 would reduce benefits for new employees hired after July 1, 2011, and SB43 is intended to stop future rehired retirees from "double-dipping," collecting both a paycheck and a pension.

A huge crowd of teachers, state workers, public safety officers and others covered by the system gathered at the Capitol Saturday to protest the changes. Employee groups have called on the Legislature to continue studying the problem before taking action.

Liljenquist said Monday lawmakers have already spent a year looking at how to deal with the shortfall. He said another independent study will start in the spring, but the retirement system needs time to set up for the new, reduced benefits.

"We'd have an entire session to do additional, cleanup work if we realize those numbers are off," he said. The current estimate is that it will cost the state about $400 million a year for 25 years to fully fund the system.

"Let's wait," said Utah Public Employees Association executive director Audry Wood. She said state workers would like to see the 401(k) contributions put in place in the mid-1980s left alone.

"I think we would be really happy if he were looking at backing off that piece because it's the one that affects current employees," Wood said. "That'd be really nice if he did."

The Senate retirement committee is scheduled to hear the bills Wednesday.

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