BISMARCK, N.D. (AP) — North Dakota lawmakers are willing to consider excluding newly hired teachers and government workers from state pensions, and putting them instead into retirement savings plans that do not have guaranteed benefits, an Associated Press survey shows.


BISMARCK, N.D. (AP) — North Dakota lawmakers are willing to consider excluding newly hired teachers and government workers from state pensions, and putting them instead into retirement savings plans that do not have guaranteed benefits, an Associated Press survey shows.
The financial woes of pension funds managed by the North Dakota Public Employees Retirement System and the Teachers' Fund for Retirement, as well as a drumbeat of reports about other states' pension difficulties, have made North Dakota legislators more open to shaking up the system, its detractors say.
"We're in the zone of being able to do something about this," said Dustin Gawrylow, the director of the North Dakota Taxpayers Association and a critic of the state's pension structure. "If you can deal with it now, it's better to fix the problem, and address the problem early, rather than letting it stew."
The Associated Press, in a survey of North Dakota lawmakers, asked whether they would support closing the two funds to new members, enrolling new hires instead in a plan similar to the 401(k) plans common in private business.
Among North Dakota House members who responded, 49 supported the idea, 16 opposed it and eight said they were undecided. In the Senate, 24 favored the proposal, nine did not and three said they were undecided.
The survey was conducted by regular mail and electronic mail during December. Thirty-six of the Legislature's 47 senators and 73 of its 94 House members replied, a response rate of 77 percent.
The Public Employees Retirement System's $1.63 billion pension fund covers almost 20,000 workers, and has about 6,4000 retired employees drawing benefits.
Participants include most North Dakota state government employees, 48 of the state's 53 counties and the cities of Fargo, Grand Forks and Williston.
The $1.54 billion teachers' fund has about 9,700 contributing employees and about 6,500 retirees.
Both funds were hammered by the stock market's severe downturn two years ago, and the market's subsequent rally hasn't restored the funds to their former values.
Analysts say both funds are likely to exhaust themselves within 30 years unless pension contributions are increased. A North Dakota legislative committee that reviews pension legislation has recommended bills to raise the employer and employee contributions for both funds.
If contributions rise, a plurality of the survey's respondents in both the House and Senate said they favored raising them for both workers and their employers, rather than asking only one or the other to increase their contribution.
A proposal to bolster the teachers' fund with $75 million from the state's general fund got little support from lawmakers in the survey. The Legislature's pension oversight committee considered the idea earlier this year but declined to recommend approval.
The pension committee also rejected a proposal to close the pension funds to new hires and route them instead to tax-deferred savings plans that do not offer the guaranteed benefit of a traditional pension plan.
Analysts said the change would carry large start-up expenses, and would exhaust the assets of the traditional pension funds more quickly than if the status quo were maintained.
The AP survey shows, however, that the entire Legislature is willing to take up the idea.
"I think we have our work cut out for us in showing what the cost of making such a conversion would be," said Stuart Savelkoul, director of the North Dakota Public Employees Association.
The traditional pension fund that now covers public employees is called a "defined benefit" plan. Once an employee has worked in his or her job long enough, he or she is entitled to a monthly payment upon retirement. Its size depends on each worker's age, length of service and salary history.
Advocates of the traditional pension say it provides the assurance of a guaranteed monthly benefit, which is paid without regard to the vagaries of the stock market.
A 401(k) plan, which allows employees to save money tax-free until they retire, is an example of a "deferred contribution" plan. It allows workers to control how their retirement savings are invested, and direct how any leftover retirement money is used after they die.
Traditional pensions, while they are a common benefit for public employees, are increasingly rare for private workers, which has raised the argument of whether private employees — whose retirement savings suffered in the recent market downturn — should have to guarantee the pension benefits of public workers.
"We are going to have a debate about whether we should have two separate systems," Savelkoul said.