Budget provision puts pension system, health plan at risk

Nov 13, 2023

A provision snuck into the state budget with no debate will likely cause severe problems for the state employees’ pension system and health plan.

Legislators wrote into the budget a provision that allows UNC Health and ECU Health to move employees out of the state retirement system and into a defined contribution plan. Current employees will have a choice between the two systems, but new hires after Jan. 1 will be required to join the new system.

SEANC Executive Director Ardis Watkins told the News & Observer that this move will have a huge detrimental effect on the state pension system and the State Health Plan. It will put cost-of-living adjustments for retirees, and pay raises for employees in jeopardy and may cause health plan premiums to rise.

Employees currently on the state’s retirement plan “are counting on that retirement when they get to the end of their career,” Watkins said, “and they’ve worked for less than private sector wages because the benefits were supposed to be strong” but now, this change will weaken the stability of the plan.

And if one department or agency is allowed to do this, others will follow, State Treasurer Dale Folwell told reporters Tuesday.

“Eventually, what UNC Health is trying to do is going to raise the cost of running community colleges. It’s going to raise the cost of the Department of Transportation. It’s going to raise the cost of corrections. It’s going to raise the cost of public education. It’s going to raise the employer contribution rate and the cost on everyone else in this family if this proceeds,” Folwell said.

SEANC is exploring all options, including possible litigation, to stop this harmful plan and ensure members are heard.