Tuesday, August 03, 2010

State Governments Changing Retirement Rules, Requiring Later Retirement

State governments are increasingly requiring many new government employees to work longer before retiring with a full pension, or are increasing penalties for early retirement, according to an article in the Wall Street Journal. As written by Jeannette Neumann, Michel Corkery, and Marcus Walker, states are responding to widening gaps between the obligations made to workers and the money expected to be available to pay them. "Though lengthening lifespans have been expected to pressure pension systems, the looming fiscal predicament has emboldened lawmakers to demand more years from employees."

Among the changes highlighted in the article:
  • Illinois--lawmakers voted in March to increase the retirement age for most new hires to 67 from 60.
  • Utah--new fire and public safety employees as of July 1, 2011, must work 25 years, up from 20, before getting a full pension. Most other state employees must now work 35 years instead of 30 before receiving their pension.
  • Arizona--increased the "retirement rule"—worker's age plus years of service before retirement—to 85 from 80.
Source: Wall Street Journal Stressed States Are Forcing Workers to Retire Later (February 2, 2010)

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