Gov. Doug Burgum today signed a major pension reform bill that protects the retirement benefits for existing public employees and retirees and also protects taxpayers in the long-term by addressing a $1.9 billion unfunded liability in the North Dakota Public Employees Retirement System (NDPERS).
House Bill 1040 closes the state’s existing defined benefit plan and injects $200 million into NDPERS to begin reducing the $1.9 billion unfunded liability, helping to ensure the state can meet its future obligations to more than 53,000 employees and retirees from state government and local governments enrolled in the plan. The legislation also shifts new hires to a generous defined contribution plan, similar to 401(k) plans offered to employees in the private sector.
“This bill allows us to ensure our ongoing obligations to current and former team members enrolled in the state pension plan while finally addressing the $1.9 billion in pension debt looming over taxpayers,” Burgum said. “We’re grateful to House Majority Leader Mike Lefor’s determined leadership on this issue and the interim Retirement Committee for bringing this plan forward and ushering it through the Legislature with thoughtful debate. House Bill 1040 will help in recruiting new team members and give them greater flexibility and portability in their retirement accounts, while also maintaining and protecting pension benefits for existing team members and retirees. Taking the off-ramp from defined benefits now will save North Dakota taxpayers billions more down the road.”
Burgum first proposed switching to a defined contribution plan and injecting $265 million into the pension fund in 2019. In his executive budget proposal for the 2023-2025 biennium, he recommended a $250 million infusion into the pension fund. House Bill 1040 infuses $200 million into the fund and adjusts contribution rates to ensure the plan can cover ongoing benefit payments and pension debt.
The House passed the bill on a 76-17 vote and the Senate approved it 28-19.