With Texas legislators looking for ways to trim spending for the January legislative session, retirement plans for new UT faculty and staff may look more like 401(k) plans than the predetermined pension plans state employees currently receive.
The proposed defined contribution plan for public employees would work much in the way a 401(k) plan does, guaranteeing a set pension after retirement based on salary and years of service. 401(k) retirement accounts are savings plans into which employees and their employers deposit money to be withdrawn after retirement. Jim Branson, an organizer for the Texas State Employees Union, said these benefits can attract individuals to state employment.
Branson said many choose to work in the private sector because of the higher salaries.
“It is not fair,” Branson said. “Employees want an idea that when they retire, they will have something there.”
Under the predetermined state plan, UT employees receive a set pension payment after retirement, determined by salary and years of service. While the university’s employees all fall under the plan, UT is a public institution and is not involved in determining the plan. Branson said the union does not have an antagonistic relationship with UT.
The union’s UT chapter recruited University employees Thursday in front of the Perry-Castañeda Library. With 12,000 members, the Texas State Employees Union is the largest public employees union in Texas and the UT chapter is several hundred strong, Branson said. Members advocate for higher wages, benefits, health care and pensions.
“For workplaces to have any kind of security is a result of union work,” Branson said. “We are protecting what people struggled to win.”
State Rep. Ana Hernandez Luna, D-Houston, said a public hearing scheduled for Wednesday regarding the state retirement plan will illuminate what changes need to be made. Hernandez Luna, a member of the House Pensions, Investments and Financial Services Committee, said the current predetermined plan will remain effective through 2075 for current employees. New employee retirement plans would be the plans adjusted to the defined contribution format, the plan similar to a 401(k).
“We expect a lot of testimony,” Hernandez Luna said. “The defined contribution plan is a transfer of risk from the employer to the employee.”
Hernandez Luna said the defined contribution plan is one of many potential new plans. At this point, she said it is unclear whether the contribution plan would reduce the state’s retirement plan expenses.
“If the Texas State Employees Union is on campus raising awareness, I think that is great because everyone should be concerned about what their legislature is doing,” Hernandez Luna said.
The union relies on members’ dues, which is the only way half of union members participate, Branson said. Other members, including library assistant Kathryn Kenefick, table on campus and visit legislators at the state Capitol on behalf of the union.
Kenefick said she joined to have more influence on the system that employs her.
“Unions help by specifying work conditions and strengthening the infrastructure so employees can work with confidence and security,” Kenefick said.