Panel: SD Retirement System can design plan changes

Talk about it

PIERRE — The trustees who govern South Dakota’s retirement system for public employees want to explore a hybrid plan that would reduce some of the risks in trying to keep benefits and investments in better balance.

Now, those trustees are asking the Legislature to trust them in coming up with changes. The Senate’s committee on retirement laws endorsed the passage of Senate Bill 30 on a 5-0 vote Thursday afternoon.

The senators didn’t ask any questions, didn’t engage in a single word of discussion about it and didn’t get much of an explanation of what might change.

The only witness to testify was Rob Wylie, the administrator for the South Dakota Retirement System.

“We’ll cut off those high points and low points and protect the plan in times that are volatile,” Wylie said.

SDRS members are current and past employees of state government, public safety organizations, state universities, school districts, county and municipal governments and other forms of local government.

The retirement system’s portfolio value two years ago had dipped as low as 76 percent of the amount necessary to be in financial balance. The value rebounded since then and stood at 103 percent as of the June 30 end of the 2011 fiscal year.

The system would still need to be 123 percent funded before a benefit increase can be considered, just as it now is, according to Wylie.

“This may seem like an unusual step for us to take right now,” Wylie said. “We don’t feel like it is a time to rest.”

Sen. Angie Buhl, D-Sioux Falls, objected to the bill being placed on the Senate consent calendar. That means the bill must be talked about on the Senate floor, with a roll call vote held, rather than passing as part of a group of bills on a single roll call without discussion.

Afterward, Wylie spoke to the committee members and tried to better explain it. He described it as enabling but doesn’t change anything currently in place. He said some assets could invested in different ways

The Senate committee also endorsed SDRS-backed legislation allowing establishment of a Roth IRA plan to be offered to SDRS members as one of the system’s deferred-compensation options.

Wylie said the Roth option would become available July 1, 2013. A Roth plan allows contributions to be made after payroll taxes are deducted, with payouts upon retirement tax-free.

The South Dakota State Employees Organization formally supported the Roth legislation, SB 29. No one spoke against it. The committee vote was 5-0 in favor.

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