Pension FAQ

By: North Dakota United

Published: September 2023

First Appeared In United Voices - September 2023

At the end of the 2023 legislative session, Governor Burgum signed into law HB 1040. The law closes the North Dakota Public Employees Retirement System (NDPERS) defined-benefit retirement plan to new hires as of Jan. 1, 2025. This will affect new state employees, city and county employees, and education support professionals in districts across the state. The law will also create significant stress on NDPERS to sustain benefits for current employees as the closed plan will have to take on far less risk by investing conservatively. While supporters of this misguided idea like to suggest it will not impact current employees, the history of other closed defined-benefit plans around the country suggests we need to be vigilant to protect the plan.

Why Did the Legislature Close the Defined-Benefit Plan?

At the end of the day, this was primarily an ideological push by the Legislature. Instead of making the investments to support the NDPERS defined-benefit plan for a cost of approximately $1 billion, the Legislature chose to close an important benefit for employees at a projected cost of $5 billion.

Have Other States Done This to Public Employees?

Yes. Alaska, Oklahoma, Michigan and West Virginia have closed their defined-benefit plans.

What Have the Repercussions Been in Other States That Have Closed Their Defined-Benefit Plans?

Alaska closed plans for all public employees, including teachers. They are facing a recruitment and retention crisis, and Alaska citizens are not getting the services they require. There is a major, bipartisan push to re-open the defined-benefit plan and address the crisis.
Oklahoma has also passed bipartisan legislation through one chamber of their legislature to re-open their plan for the exact reasons as Alaska.
Michigan’s defined-benefit plan has been closed since the late 1990s and is starting to face a serious asset crunch for employees and retirees who were told they wouldn’t be impacted. Like every other state, there is a major push to re-open the defined-benefit plan.
West Virginia closed their defined-benefit plan, but have already re-opened the plan after similar experiences to Alaska, Oklahoma and Michigan.

Could the Teachers Fund for Retirement (TFFR) Be Next?

The short answer is yes, and many legislators are on record asking why we aren’t taking the same steps with TFFR as they have with NDPERS.

What Is North Dakota United Doing To Address This?

When NDPERS was first established in 1966, it was largely due to the efforts of a group of state employees who organized as the North Dakota State Employees Association. At its start, the plan was defined contribution, and by 1977, the NDSEA had again organized for change and turned it into the powerful recruitment and retention tool it became as defined benefit. As the saying goes, “We did it before, and we can do it again!” Unified under the banner of North Dakota United, we all must continue to organize community opposition to these changes, educate legislators about the concerns listed above, and advocate for retirement security for all.

North Dakota United