HB 2976 would no longer allow state employees, who are receiving an annuity from the Employees Retirement System (ERS) based on state service, to receive longevity pay or benefit replacement pay. The proposal would also determine vacation leave based only on the length of state employment after the retirement date.

The bill is not estimated to have a significant actuarial impact on ERS. To the extent active state employees delayed retirement due to the prospect of returning to work resulting in lower pay and less vacation, there would be actuarial gains to the system. In 2004 approximately 20 percent of retirees returned to work, though many were likely inspired to retire earlier by the retirement incentive. Under the proposal, some of these may have made different choices, though the change in incentives provided by the proposal is modest.