Union identifies public pension modernization as a top federal issue

In recognition that public pension modernization is important to the public employees represented by the FPE/AFT, the union is aggressively pursuing congressional support for the Comprehensive Retirement Security and Pension Reform Act.

The union's campaign to enlist lawmaker support began Jan. 26 when the AFT joined 26 other organizations in a mass mailing to every member of the U.S. House of Representatives seeking their co-sponsorship of the measure, which was introduced March 14 by Reps. Rob Portman (R-Ohio) and Ben Cardin (D-Md.).

Specifically, the bill, HR 10, would increase portability by allowing tax-free rollovers of 403(b) and 457 plans; and provide greater flexibility by removing complex compensation limits, increasing section 415 allowable contributions and permitting 457 and 403(b) plans to be used for purchase of service credits.

Brian Curran, legislative director of the FPE/AFT-affiliated New York State Public Employees Federation (PEF), notes keen member interest in the bill. The part that would affect FPE/AFT members, he says, deals with section 457, deferred-compensation plans.

"This is a portability and flexibility issue," Curran says, explaining that under current rules, public employees enrolled in 457 plans must make an election when they leave or retire from public service as to how benefits are going to be paid out. "That election is irrevocable so employees don't have the ability to change the amount they pull out," he says, noting that Portman-Cardin would allow employees to roll over their pension funds into an individual retirement account, which would allow them to manage their money and withdraw funds as needs demand.

"This bill gives people in deferred-compensation plans the same rights as people in 401(k)s," Curran says.

The FPE/AFT also supports provisions of the bill to increase employee contribution amounts. Specifically, the bill would increase employee contribution maximums to $15,000 annually from the current $8,500 limit.

The Comprehensive Retirement Security and Pension Reform Act was first introduced in the 106th Congress, where it passed the House by a vote of 401 to 25. All FPE/AFT members are encouraged to contact their federal lawmakers to enlist their support for this measure.