DES MOINES - State lawmakers said Monday they expect action next session to make changes to public employee retirement programs but the scope will be tempered by the ability of government entities to invest more.

The legislative interim panel received recommendations from an Iowa Public Employees' Retirement System advisory panel that supported boosting contributions and scaling back benefits to protect the fund's long-term financial integrity.

The advisory recommendation called for raising IPERS' fiscal 2012 contribution rate to 13.45 percent to help keep the system actuarially sound in the future. The contribution is paid 60 percent by the employer and 40 percent by the employee. Currently, the contribution rate is 10.95 percent of a public employee's covered wages - with 6.65 percent paid by the employer and 4.3 percent paid by the employee. By statute, the contribution rate is to go up to 11.95 percent on July 1, 2011.

The proposed structural changes also called for reducing future benefits beginning July 1, 2012, lengthening vesting periods, and increasing penalties for retiring early among other things.

"I believe everything is doable that they recommended. It'll take some compromise as always," said Senate President Jack Kibbie, D-Emmetsburg, an interim panel co-chairman.

Sen. Steve Kettering, R-Lake View, an interim committee member, agreed a phased-in approach likely would be required but he said more attention had to be given to benefit side to help contain the rising contribution rate.

"I understand the difficulties of a compromise," he said. "I don't know what the Legislature will do with this."

Advocates said the recommended changes were designed to help maintain the long-term integrity of the retirement system in the wake of stock market losses that caused trust fund assets to drop about 20 percent recently.

IPERS, which has nearly 320,000 members, experienced a fund drop from $22.4 billion at the end of fiscal 2008 to $17.9 billion one year later in June 2009. However, since then, market gains have rebuilt the fund's estimated value back up to $19.86 billion as of Oct. 31.

IPERS' membership includes 87,500 retirees, another 167,850 who are contributing and nearly 63,300 who have money in the system but no longer are contributing.

In fiscal 2008, IPERS paid nearly $1.1 billion in benefits, with more than $967.8 million - more than 88 percent - paid in Iowa. The average monthly benefit paid to all retirees was $996; $1,489 for someone retiring in 2008.