A battle appears to be brewing in Indiana over a plan to privatize future annuity payments to retired public workers and teachers.
In July, the Indiana Public Retirement System (INPRS) board of trustees voted to seek an outside third-party insurer to administer its Annuity Savings Account (ASA) program for future payments. It also green-lighted a switch to a market rate for annuities, beginning Oct. 1, 2014.
Currently, retirees receive a defined benefit (DB) pension, as well as an option to direct contributions into an ASA, which can result in investments gains and/or losses. State law requires that 3 percent of wages be contributed to the annuity account, according to a spokesperson for INPRS.
When they retire, members can choose to withdraw as a lump sum, roll over or convert the ASA account balance into a monthly income stream. The ASA program is in addition to the DB benefit. Half of retirees decline to participate in the annuitization option, according to INPRS.
However, the Pension Management Oversight Commission (PMOC) the Indiana State Legislature has recommended that the pension board keep the annuity program in-house and not contract with a third-party provider. In October, INPRS asked that its staff work with PMOC for clarification on that recommendation.