The Iowa Senate

State of Iowa

Eighty-First General Assembly

STATEHOUSE

Des Moines, Iowa 50319

For Immediate Release Contact: Kimberly Steenhoek

Thursday, Feb. 2, 2006 (515) 281-6571

Lawmakers Strike Deal on IPERS

Bipartisan Agreement will Help Improve Financial Outlook of Retirement System

DES MOINES – Republicans and Democrats in the Iowa Senate today reached a compromise on changes to the Iowa Public Employee Retirement System, or IPERS.

The bipartisan agreement includes increasing contribution rates for employees and employers by 0.5 percent a year over the next four years, for a total increase of 2 percent or approximately $122 million.

Currently, IPERS receives 9.45 percent of an active member’s compensation. Employers pay 60 percent of that amount and employees contribute 40 percent. The 2 percent increase in contribution rates would raise the total compensation contribution to 11.45 percent. The 60-40 split would remain. The rate increase would take effect in fiscal year 2008.

“This agreement will help improve the financial outlook of IPERS,” said Senate Republican Leader Stewart Iverson (R-Clarion). “As taxpayers, all Iowans have a financial stake in IPERS.”

The IPERS pension fund has enough assets to cover 88.5 percent of its liability. Its unfunded actuarial liability is $2.2 billion. During the 2005 session, senators worked to make needed changes to the IPERS fund but could not find agreement.

In addition to contribution rate increases, today’s compromise includes the following measures: no benefit enhancements until the IPERS fund has enough assets to cover 100 percent of its liability; and controls over “spiking,” or the benefit increases some employees receive because their salaries dramatically increased during their last three years of service. Currently, IPERS determines annual retirement benefits based on an employee’s salary during the three years immediately prior to retirement.

“The bipartisan agreement will benefit the more than 300,000 IPERS members,” said Sen. Jeff Lamberti (R-Ankeny). “We’re committed to protecting the retirement benefits for those who have provided Iowa with many years of strong public service.”

“This plan will give IPERS some time and a little bit of a cushion to get on the road back to solvency,” said Sen. Mark Zieman (R-Postville).

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