IndianaSB 14Second Regular Session 124th General Assembly (2026)SenateWALLET

Pension matters.

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Bill Overview

Analyzed Economic Effects

8 provisions identified: 4 benefits, 0 costs, 4 mixed.

Retiree health accounts reset in 2027

After December 31, 2026, many retirement medical accounts end and balances are forfeited. INPRS sends the money to the state general fund, then the comptroller moves an amount, based on age and service under law, into your DC account. Retirees, their spouses or dependents, and some others are not affected. You can keep retiree-health coverage by choosing the successor account during open enrollment by December 1, 2026. Employers must also put in yearly retiree-health amounts by your age: under 30 = $500; 30–39 = $800; 40–49 = $1,100; 50+ = $1,400. A new 2027 retiree health trust fund holds money for these benefits. By December 31, 2026, INPRS identifies money not needed right away; after that date, the budget agency moves that part to the state general fund before putting the rest into the trust.

Police/fire fund: higher death benefit, SROs

Beginning July 1, 2026, heirs or an estate of a 1977 fund member get at least $15,000 at the member’s death (up from $12,000). School corporations and charter schools that employ or contract school resource officers (SROs) can participate in the 1977 fund. An SRO hired or rehired after June 30, 2024 who is already a member stays in the 1977 fund.

State 401(a) match up to $28 per paycheck

The state sets up a 401(a) plan that matches your deferred comp contributions. After December 31, 2026, the state matches dollar-for-dollar up to $28 each payroll, as long as money is budgeted. The budget agency can pause or restart the match in hard times. The comptroller also makes a one-time transfer into your DC account based on your age and service under state law. The deferred compensation committee is the trustee and the comptroller runs the plan.

Vested DC members can join pension

Beginning July 1, 2026, if you are fully vested in the employer part of your DC account, you can make a one-time, irrevocable choice to join the public employees’ or teachers’ pension fund, if allowed. Teachers in both plans can also buy service credit if they have at least one credited year and 10 combined years. You must pay salary times an actuary-set percent for each year you buy, plus interest. The board may let you pay over time or use a rollover.

New rules for pensionable pay after 2027

If you retire after December 31, 2027 (nonteacher members), your average pay uses the higher of two choices: your five best calendar years or your five best fiscal years. Each year must be 12 months with at least six months of service. The five years do not have to be back-to-back. Pay in your last year that is more than 120% of the prior year is treated as "in contemplation of retirement" and is excluded if you served the full prior year. This can lower pensionable pay for late boosts.

Stronger oversight and bonds for local pensions

The pension relief fund can only pay listed local pension benefits and related admin costs. A subdivision is flagged as delinquent if it paid under 95% of its required amount in 3 of the last 5 years, or was under 50% funded last year; it must present a remediation plan after a June 15 notice. Starting July 1, 2026, cities and counties may sell pension bonds with maturities up to 40 years and total amounts up to 2% of local true tax value. The law also repeals the rule that required separate local accounts inside state pension funds.

Cigarette tax split shifts to health and pensions

After June 30, 2025, cigarette tax money is split by set shares: 23.67% to the state general fund, 2.26% to the pension relief fund, 11.26% to the Healthy Indiana Plan trust, 1.67% to the retiree health trust, and 1.76% to the cigarette tax fund. From 2025 to 2027, special rules apply. The budget agency may reduce the retiree health deposit and move the rest to the general fund. Money left in certain funds at year end does not revert.

Easier payroll deposits to your retirement account

Beginning July 1, 2026, your employer may send part of your pay to your federal tax‑deferred retirement account without the usual assignment steps. The account must be in your name, under your control, and immediately vested. You can opt out any time with written notice.

Sponsors & Cosponsors

Sponsor

Linda Rogers
Republican • Senate

Cosponsors

Blake Doriot
Republican • Senate
Brian Buchanan
Republican • Senate
David Niezgodski
Democratic • Senate
Heath VanNatter
Republican • House
Jake Teshka
Republican • House
Scott Alexander
Republican • Senate
Shelli Yoder
Democratic • Senate
Tony Isa
Republican • House
Victoria Garcia Wilburn
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 283 • No: 0

House vote • 2/27/2026

Roll Call 410 on SB0014.04.COMH.CCH001

Yes: 95 • No: 0

Senate vote • 2/27/2026

Roll Call 314 on SB0014.04.COMH.CCS001

Yes: 49 • No: 0

House vote • 2/17/2026

Roll Call 260 on SB0014.04.COMH

Yes: 90 • No: 0 • Other: 3

Senate vote • 1/6/2026

Roll Call 12 on SB0014.03.ENGS