Mourdock Among Thousands of State Employees Locking in Higher Retirement Benefit by Exiting Early
State Treasurer Richard Mourdock is just the highest-profile state employee to leave his job before a change in state retirement benefits kicks in.
State employees have both a pension and an annuity savings account. When they retire, about half elect to take the annuity as a monthly payment. But Indiana Public Retirement System spokesman Jeffrey Hutson explains with falling interest rates, the state is now paying retirees a higher rate than INPRS is receiving on its pension fund investment. To stabilize the fund, legislators voted to cut the interest rate on those accounts from 7.5% to 5.75% for employees still on the job by Labor Day.
Hutson says the change would cost the average worker $860 a year.
With the cut looming for those who stay on, Hutson says retirements are up 35% this year. And INPRS expects a higher-than-normal retirement pace again next August, when the rate goes down another 1.25 points.
The same change applies to retiring teachers who take the monthly payment option. Hutson says the average teacher's retirement account is more than twice as large, so the reduced interest rate translates to an annual loss of $1,100. Hutson says teacher retirements are up 10% over last year.