A measure approved by the Oklahoma House of Representatives would stabilize the state’s firefighter pension system by, among other things, increasing the percentage of insurance premium tax allocated to the system.
The House voted 93-1 in favor of House Bill 2320, which also modifies interest rate provisions within the Oklahoma Firefighters Deferred Option Plan (DROP) by stipulating that the rate of return will be 7.5 percent instead of higher rates currently allowed by law.
Under current law, the rate of return is guaranteed to be the better of the market performance or 7.5 percent, whichever is higher. That results in a compounding effect that dramatically increases guaranteed benefits even at times when market returns are below 7.5 percent.
The measure also increases the employee contribution rate from 8 percent to 9 percent of gross salary and raises the employer contribution rate from 13 percent to 14 percent of paid gross salaries.
Based on current annual payroll figures for the system, the higher contribution rates will generate approximately $2.5 million per year from employer contributions and $2.5 million annually in additional employee contributions for a total of approximately $5 million.
HB 2320 increases the percentage of insurance premium tax allocated to the firefighters’ retirement system from 34 percent to 36 percent.
Based on previous year collections, that change will provide approximately $3.5 million per year in additional revenue for the system.
HB 2320 passed the Oklahoma House of Representatives with bipartisan support. It now proceeds to the Oklahoma Senate.
Source: Oklahoma House of Representatives