The Delaware General Assembly has voted overwhelmingly to approve a bill to reduce pension contributions to the state’s public employees, a measure that will take effect in July.
The vote comes after Gov.
Jack Markell and the Senate passed the bill in March.
It would require all public employees in Delaware to contribute at least 20 percent of their compensation to their pensions.
It also creates a system of matching contributions for state employees to their private retirement accounts, a provision that some experts say could increase the amount of money owed to state workers.
The bill now goes to the Senate and House of Representatives for final approval.
A spokeswoman for Markell said the governor supports the measure and has already begun the process of moving it through the legislative process.
“The governor’s focus right now is on getting our state to a better place, and the legislative session is just the beginning of the road toward that,” spokeswoman Andrea Smith said.
“It’s also important to recognize that the Governor has directed the Office of Retirement Security to review the proposal and will be looking at it carefully.”
We’re not going to be able to get everything done quickly and we’re going to have to be flexible in how we do it.
“A Senate committee voted 11-1 last month to approve the bill.
The bill now heads to the Assembly.
A House committee vote on the bill was postponed last month and the House will resume consideration next week.
The measure will require state workers to make a monthly contribution of about $1,400 to their retirement accounts.
That will be adjusted to reflect inflation over time.
The state already offers a 401(k) plan for state workers and a state pension plan for retired state employees.
The two plans differ in that the former offers a guaranteed income that could be withdrawn at any time and the latter does not.
The governor signed an executive order on Tuesday requiring state agencies to set up plans similar to the Delaware pension system and allow employees to take advantage of the plans.
State officials have said they will not implement the state pension system because it doesn’t meet the state constitution’s definition of a public pension.
The new law sets up a new system.
The plan requires workers to contribute 20 percent to their 401(b) and 70 percent to a retirement account.
The savings can be withdrawn when they retire, at the end of their work years or when they take a lump sum of money out of the retirement plan.
The new law will take the first steps toward a system that could eventually be used for millions of workers in the state, said Scott Smith, a law professor at the University of Delaware.
Smith said that if the plan goes into effect, the amount the state would need to pay retirees for a lifetime of contributions would increase.”
You’re going from roughly $1.2 trillion to about $3 trillion,” Smith said, noting that a retirement plan for public employees will likely cost more than $2.5 trillion.
He said it could be cheaper to set aside money for state retirees than to pay those workers for decades to come.”
It’s kind of like what the U.S. does with its health care system,” Smith, who specializes in retirement planning, said.
The Delaware General Council on Tuesday was expected to vote on a bill that would allow the state to impose a 30-percent annual payroll surcharge on state workers earning more than about $150,000 annually.
The surcharge would go into effect Jan. 1.
The surcharge has been opposed by employers and labor unions because it could hurt the state economy by cutting jobs and creating more tax revenue.