SB 25, introduced by Senator Boots, would require that a political subdivision’s defined benefit plan (pension plan) be terminated if the political subdivision fails to make the full, actuarial determined contribution to the plan for three consecutive years. The fiscal impact statement makes this seem like maybe not such a great idea. The note indicates that plans are subject to IRS rules for termination, is skeptical that plans would have sufficient funding to provide the required member benefits and annuities, and suggests that litigation would follow. On the upside, the 2016 Local Pension Report indicates only two political subdivisions that have not made the required payments in the last three years. (Unfortunately the fiscal note does not indicate which two political subdivisions.)
I suppose the intent is to add some pressure to political subdivisions to make sure they don’t get too far behind on their pension obligations. But, this seems like a Procrustean solution that would ultimately do more harm than good if it was ever triggered.