There continues to be much concern and misinformation regarding Senate Bill 075 ("SB075") from the last session of the General Assembly. Let me provide you with the history of the Bill and the facts. Last year at our annual conference, we heard from brothers from the Terre Haute Lodge. They clearly wanted the State Lodge to consider seeking to improve the retirement benefits under the 1977 Fund. They suggested various ways to accomplish this. The delegates in attendance authorized us to seek pension enhancements in the 1977 Fund.
We learned that Senator John Ford from Terre Haute along with the Terre Haute FOP had worked up a bill draft that we received. This bill was ultimately filed as SB075. The bill, as originally filed and if it had passed, would have allowed retirement at age 50 with 20 years of service, increased from 1% to 1.5% the amount of additional retirement benefit for each 6 months of active service over 20 years and reduced the number of years of active service from 32 to 28 to recieve the maximum retirement benefits.
The Bill was assigned to the Senate Pension and Labor Committee. The chairman of that Committee advised us he was not inclined to hear the Bill, but that if he did hear the Bill, he would proably not vote it out of Committee. He suggested that the Bill was better suited for a Summer Study Committee. This told us the Bill was essentially dead on arrival.
SB075 was heard in the Pension and Labor Management Commmittee. We testified in favor of it. Senator Boots amended the Bill in Commmittee changing the Bill to a recommendation for the Summer Study Committee (PMOC) to review pension enhancements so that the issue of increasing benefits could be further reviewed, researched, and discussed with interested parties. The Bill, as amended, did pass the General Assembly and was signed by the Governor. It only allows the study of pension improvements, nothing more.
SB075 will be heard by the Pension Management Oversight Committee (PMOC) in August and September. We have met with Representative Woody Burton, Chairman of the PMOC, in anticipation of those meetings. He clearly indicated he would allow discussion of the originally introduced SB075, but that he did not believe the Bill would be recommended for further action by the PMOC. He indicated that he was interested in hearing testimony on other ways of possibly enhancing pension benefits. There have been no dates set for PMOC at this time.
Last week we met with Senator Ford and explained to him an alternative proposal to improve benefits as an alternative in case the elements of SB075 do not get recommended by PMOC as seems likely based upon all of the above information. That proposal is to increase benefits prospectively by 2% (at 20 years of service taking the benefit from 50% to 52%). Each year of service from 20 years through 32 years of service would also be increased by 2%. Benefits at 32 years of service would be 76% instead of the current 74%. In addition, surviving spouse benefits would go from 60% to 65%.
Clearly the Indiana FOP is supporting SB075 as originally introduced. If we can move the concept with the blessing of the PMOC, we should have a decent chance at passage of the new bill next session. If, on the other hand, the concepts of SB075 fail to get the endorsement of PMOC, we will be supporting any pension enhancements that we have a chance of getting through the General Assembly. Increasing the percentage of benefits as well as increasing the surviving spouse benefit is one way to enhance benefits. There seems to be a general feeling that the Indiana FOP doesn't support SB075. This is not true. We simply realize that it will be an uphill battle passing a bill with enhancements that only affect about 20% of our membership (those who retire at the earliest opportunity).
The increasing of the benefit percentage as explained above hels ALL of our members who will retire in the future. Statistically only 21% of the 1977 Fund members eligible to retire at age 52 actually do retire at that age. Most retire in their mid to late 50s. It is the goal of the Indiana FOP to help enhance pension benefits in any way that we can and to help the greatest number of our members in doing so. We believe that the time is right to seek improvements in benefits and we will do whatever it takes to shepherd whatever improvements can be accomplished through the legislative process. There hasn't been an opportunity for pension enhancements in decades and there is no way of knowing when the opportunity will present itself again. The Indiana FOP has always looked out for the best interests of all our members and this is another case where we will be doing just that. If we lose the opportunity to get something, it may be decades before we get another chance.