Retirement; Retirement Freedom Act; minimum employer contribution amount; employer matching; vesting schedule for certain funds; reemployed participants; effective date.
Summary
HB3313 amends the Retirement Freedom Act to increase the required employer match for participating employees in the defined contribution retirement system from 6% to 7%, beginning November 1, 2026. It also raises the initial mandatory employee contribution rate from 4.5% to 5%, while allowing employees to elect higher contribution rates up to federal limits and to change that rate once per month. The bill keeps employee contributions fully vested at all times and places those contributions in the appropriate 401(a) or 457(b) structure, while employer matching funds are placed in a 401(a) plan.
The bill also changes vesting rules for employer matching contributions. Under the new schedule, employees become vested in employer matches at 20% after one year of service, 40% after two years, 60% after three years, 80% after four years, and 100% after five years and beyond. It further provides that employees who are reemployed after November 1, 2026, receive credit for prior service and retain the vested portion of earlier employer contributions, but they do not regain any previously forfeited employer contributions. The act takes effect November 1, 2026.
Impact
HB3313 would amend Sections 935.5 and 935.7 of Title 74, which govern the Retirement Freedom Act and the defined contribution retirement system for participating public employees. The bill increases the minimum employer contribution obligation, increases the default employee contribution rate, and replaces the prior vesting structure for employer matching funds with a five-year graded vesting schedule. It also clarifies treatment of reemployed participants and forfeited contributions, affecting both the Oklahoma Public Employees Retirement System administration and participating employers and employees.
Sentiment
The bill appears to have received generally favorable support in committee and on the House floor. It passed the Banking, Financial Services and Pensions Committee unanimously, then the Government Oversight Committee unanimously, and later passed third reading in the House by a strong 79-9 vote. The voting pattern suggests broad agreement with the retirement benefit changes, though not complete unanimity at the floor stage.
Contention
The main policy issues in HB3313 are the higher required employer match, the higher mandatory employee contribution rate, and the new vesting schedule for employer contributions. Supporters likely view these changes as improving retirement savings and making the defined contribution system more attractive, while any opposition appears limited but may reflect concerns about increased employer costs, payroll deductions for employees, and the shift in vesting rules. The reemployment and forfeiture provisions are also notable because they define how prior service and previously forfeited employer funds are treated after a break in service.