Although 2013 brings with it a fiscal session to begin on Monday, April 8, 2013 at the Louisiana Legislature, there are already 45 instruments pending referral to the Senate and House Committees on Retirement. Of these 45 instruments, only approximately a dozen would have a direct impact on LSERS if passed by the legislature. The LSERS board met and voted to support the following instruments relative to the cash balance plan and Cost-of-Living Adjustments (COLA) and funding.
SCR 01 by Sen. Cortez is a suspensive resolution to suspend implementation of the cash balance plan until June 30, 2014. A similar suspensive resolution was filed in the House by Rep. Harrison. HCR 02 suspends implementation of the cash balance plan through the earlier of: 60 days after both: a) receipt by the DOA of a private letter ruling from the IRS that the cash balance plan meets the social security equivalency test, and b) receipt by LASERS that the plan does not affect tax qualification status, or July 1, 2014.
Rep. Price has authored HB 46 which provides a COLA of up to 3.75% to be paid from the Experience Account to LSERS retirees who retired or entered DROP before July 1, 2001. Sen. Guillory has authored SB 17 to provide for 2% of revenue collections in excess of FY 2011-12 levels to be dedicated to liquidating unfunded accrued liabilities (80%) and to funding benefit increases (20%) for retirees of the state retirement systems.
The board has taken a position to oppose HB 43 by Rep. Thibaut which exempts local school boards from paying the unfunded accrued liability (UAL) associated with privatization and HB 60 by Rep. Talbot aimed at curbing retirees from returning to work by requiring a suspension of benefits during employment for anyone who returns on or after July 1, 2013.
There are various other bills which will impact LSERS if they are passed by the legislature, however the board is continuing with due diligence waiting for more information before any action is taken on the following bills.
SB 07 by Sen. Peacock provides for a five-year final average compensation (FAC) period for all members who retire or enter DROP after January 1, 2014. The bill accomplishes this gradually over a two-year window (1/01/2014 – 12/31/15) incorporating transitional language to ensure that no member receives a lesser benefit than he would have prior to implementation. Another bill which provides for a five-year FAC is HB 57 by Rep. Pearson. This bill also increases employee contributions by 1% on July 1, 2015 and an additional 1% on July 1, 2017 with the additional funding to be dedicated to the payment of post-1989 liabilities. Finally, HB57 implements a minimum employer contribution rate of 15% until the system is at least 90% funded.
HB 63 by Rep. Robideaux provides a 1% COLA that is payable on an amount not to exceed $20,000 of the retiree’s benefit. This COLA shall be funded by statutorily dedicated funds which have yet to be identified.Senator Guillory has authored SB 11 to provide post-retirement benefit increases (PBI) of the greater of either 1% or the lesser of: (a) 2% or, (b) a percent necessary to preserve 80% of purchasing power as of June, 30, 2013. The PBI is payable on an amount not to exceed $50,000 of a retirees benefit. SB 11 increases employee contributions by 3% of pay beginning on July 1, 2013 and incorporates a five-year FAC with transitional provisions. Generally, in order to receive the PBI a retiree must be retired at least five years and have attained 65 years of age. Employer funded PBIs are payable July 1 each odd-numbered year beginning July 1, 2013.Employee funded PBIs are payable July 1 each odd-numbered year beginning July 1, 2019.Those partially employee and partially employer funded are payable each July 1 beginning July 1, 2019.
SB 14 by Sen. Martiny allows transfers and reverse transfers of service credit between systems while in service as well as an opportunity for the member to purchase an upgrade to the higher accrual rate of the receiving system if applicable. HB 61 by Rep. Badon establishes a “divided benefit” for all members of state and statewide retirement systems whose salary increases by more than 30% comparing one month to the average over the previous twelve months. Finally, HB 68 by Rep. Pearson is clean-up legislation relative to the cash balance plan.