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Support for LB867–Policy Statement Given at Legislative Hearing – February 6, 2012

The Lincoln Independent Business Association (LIBA) supports LB867. In order to restore pension equity between private-sector employees and public-sector employees, LIBA supports LB867 to allow reduction of the county’s retirement match to 100 percent, which is still a generous match.

A November 2011 survey states that most employers that offer a defined contribution plan (what the county offers) contributed no more than a 50 percent match for participating employees’ salaries of the first 6 percent of contributions.[1]

It is not equitable to ask taxpayers to fund county employee retirement pensions at 150 percent when the average private-sector employee is getting less than 100 percent. In fact, the Lancaster County Board has publicly declared that “the match is significantly out of line with the private sector” and that they have received numerous complaints that “this generous match [150 percent] is unfair to similarly situated taxpayers working for private employers.”[2]

A 150 percent match is unsustainable for the county. It is critical for the county to control personnel costs, which amount to about 85 percent of its total budget.[3] This is especially important because the county is operating with approximately $3 million less as a result of a reduction in state aid and prisoner reimbursement.[4] Moreover, the county faces the possibility of losing nearly $6 million more if the legislature repeals the state inheritance tax.[5]

LB867 does not mandate a reduction. While Lancaster County supports this legislation to reduce its match from 150 percent to 100 percent, LB867 would only apply to Lancaster County and would allow other counties in Nebraska to remain the same.[6]

LIBA respectfully requests that this committee pass LB867 on to general file.

[1] Nevin E. Adams, PLANSPONSOR’s 2011 DC Survey: Points of Hue, PLANSPONSOR (Nov. 14, 2011) available at http://www.plansponsor.com/MagazineArticle.aspx?id=6442483385; out of a pool of 7,000 providers, 31.7% of employers gave less than 50% match, 30.7% gave exactly 50% match and 27.3% gave 51% up to a full dollar-for-dollar  or 100% match; see also article by Hilery Z. Simpson, Bureau of Labor Statistics, How Does Your 401k Match Up (May 26, 2010) available at http://www.bls.gov/opub/cwc/cm20100520ar01p1.htm, “The most generous employers match at 100 percent of employee contributions, up to a given percent of earnings,” which BLS refers to as ‘Cadillac’ plans.

[2] LR210, 102nd Leg. (November 22, 2011) (Testimony of Lancaster County Chief Administrative Officer Kerry P. Eagan before Nebraska Retirement Systems Committee).

[3] Id.

[4] Id.

[5] LB970, 102nd Leg. (Jan. 12, 2012) (Proposes repeal of inheritance tax, which provides about $6 million to county).

[6] See Neb. Rev. Stat. § 23-2308(2) (all counties inNebraska offering DC plans provide 150 percent retirement match).