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Regular Session, 2010
HOUSE BILL NO. 930
BY REPRESENTATIVE TUCKER
RETIREMENT/STATE SYSTEMS: Relative to state retirement systems, establishes a
defined contribution plan for new hires
AN ACT1
To enact Subpart P of Part II of Chapter 4 of Subtitle I of Title 11 of the Louisiana Revised2
Statutes of 1950, to be comprised of R.S. 11:331 through 336, relative to the3
Louisiana State Employees' Retirement System, the Teachers' Retirement System of4
Louisiana, the State Police Pension and Retirement System, and the Louisiana5
School Employees' Retirement System; to create a defined contribution plan within6
such systems; to provide relative to contributions and benefits; to provide for an7
effective date; and to provide for related matters.8
Notice of intention to introduce this Act has been published9
as provided by Article X, Section 29(C) of the Constitution10
of Louisiana.11
Be it enacted by the Legislature of Louisiana:12
Section 1. Subpart P of Part II of Chapter 4 of Subtitle I of Title 11 of the Louisiana13
Revised Statutes of 1950, comprised of R.S. 11:331 through 336, is hereby enacted to read14
as follows: 15
SUBPART P. MANDATORY DEFINED CONTRIBUTION PLAN; 16
STATE SYSTEMS17
§331. Creation of mandatory defined contribution plans; state systems18
A. Notwithstanding any provision of law to the contrary, there is hereby19
created a defined contribution plan in each of the state retirement systems, in which20 HLS 10RS-558 ORIGINAL
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participation will be mandatory for persons first employed or reemployed on or after1
January 1, 2011, who would otherwise be eligible to become members of such state2
retirement systems. For purposes of this Subpart, the term "state retirement systems"3
or "systems", shall mean the following retirement systems, plans, or funds:4
(1) Louisiana State Employees' Retirement System.5
(2) Teachers' Retirement System of Louisiana.6
(3) State Police Pension and Retirement System.7
(4) Louisiana School Employees' Retirement System.8
B. Those persons required by this Subpart to participate in the defined9
contribution plans of their respective systems shall not be considered eligible for any10
benefits provided by the defined benefit plan of each respective system and shall not11
attain any service credit in the defined benefit; however, any person who is12
reemployed on or after January 1, 2011, who has accrued any rights or benefits by13
virtue of membership in any state retirement system or other public retirement14
system before such date shall retain such rights and benefits that have accrued in15
such system, but shall participate exclusively in the defined contribution plan16
established by this Subpart on or after January 1, 2011.17
§332. Administration18
Each state retirement system or its successor in interest shall provide for the19
administration and maintenance of its respective defined contribution plan20
established under this Subpart. The board of trustees of each system may promulgate21
any rules necessary for such administration and maintenance and any rules necessary22
for complying with applicable provisions of the Internal Revenue Code.23
§333. Selection of providers; criteria for placement of contracts24
A. The board of trustees of each state retirement system shall select and25
contract with no more than three providers with which participants will be authorized26
to place their contributions in products that shall be selected by the board. In27
selecting the providers, the board shall consider, among other things, the following:28
(1) The tax status of the product.29 HLS 10RS-558 ORIGINAL
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(2) The portability of the products offered by the providers.1
(3) The types of products offered by the providers.2
(4) The relation of the costs and benefits as relates to the amount of the3
contributions to be made pursuant to the provisions of this Subpart.4
(5) The ability of the designated provider or providers to provide the rights5
and benefits under the products.6
(6) The nature and extent of the rights and benefits to be provided by the7
contracts for participating employees and their beneficiaries.8
(7) The suitability of the rights and benefits relative to the needs and9
interests of participants.10
(8) The ability of the provider to provide educational services and materials11
to participants.12
(9) The methods available for participants to interact with the provider13
company; the means by which participants may access account information, direct14
investment of contributions, make changes to their accounts, transfer monies15
between available investment vehicles, and transfer monies between provider16
companies; and any fees that apply to such activities.17
(10) An evaluation of specific investment products, taking into account each18
product's experience in meeting its investment return objectives net of all related19
fees, expenses, and charges, including but not limited to investment management20
fees, distribution and marketing fees, custody fees, record keeping fees, education21
fees, annuity expenses, and consulting fees.22
(11) Organizational factors, including, but not limited to, the financial23
solvency of the provider, its organizational depth, and its experience in providing24
institutional and retail investment services.25
B. The board shall ensure that each participant is provided a quarterly26
statement that accounts for the contributions made on behalf of such participant; the27
interest and investment earnings thereon; and any fees, penalties, or other deductions28
that apply thereto. At a minimum, such statements must:29 HLS 10RS-558 ORIGINAL
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(1) Indicate the participant's investment options.1
(2) State the market value of the account at the close of the current quarter2
and previous quarter.3
(3) Show account gains and losses for the period and changes in account4
accumulation unit values for the period.5
(4) Itemize account contributions for the quarter.6
(5) Indicate any account changes due to adjustment of contribution levels,7
reallocation of contributions, balance transfers, or withdrawals.8
(6) Set forth any fees, charges, penalties, and deductions that apply to the9
account.10
(7) Indicate the amount of the account in which the participant is fully vested11
and the amount of the account in which the participant is not vested.12
(8) Indicate each investment product's performance relative to an appropriate13
market benchmark. 14
§334. Contributions15
A.(1) Each participant shall make a 10% employee contribution monthly.16
Each employer participating in a state retirement system shall contribute on behalf17
of each participant five and one quarter percent of payroll on a monthly basis. 18
(2) The entirety of such contributions, less any monthly fee established by19
the board of trustees to cover the cost of administration and maintenance of the20
defined contribution plan, shall be remitted by the system to the applicable21
designated provider or providers for crediting to the participant's account or22
accounts.23
B. Notwithstanding the provisions of Subsection A of this Section, the24
system shall not remit any funds or contributions to any provider or providers from25
an employer until the correct and total amount to be remitted to the system is26
received each month from the employer.27 HLS 10RS-558 ORIGINAL
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§335. Vesting1
A participant shall be vested upon attainment of five years of service with an2
employer participating in a state retirement system. For purposes of this Subpart,3
"vesting" shall mean the acquisition of a property right to all employer contributions4
credited to a participant's account together with all interest attributable thereto. Upon5
commencement of participation in the defined contribution plan, a participant shall6
acquire an immediate property right to all employee contributions credited to his7
account together with interest attributable thereto.8
§336. Benefits9
A. The benefits payable to participants of a defined contribution plan10
established under this Subpart are not the obligations of the state of Louisiana or any11
state retirement system, rather, such benefits and other rights of the defined12
contribution plan are the sole liability and responsibility of the designated provider13
or providers to which contributions have been made.14
B.(1) Benefits shall be payable to defined contribution plan participants or15
their beneficiaries by the designated provider or providers and not by the respective16
state retirement system in accordance with the contract types provided by the17
providers selected and the contracts approved for use in the defined contribution plan18
by the board.19
(2) Subject to the provisions of the contract, retirement benefits shall be paid20
in the form of a lifetime income, unless the participant or beneficiary requests a21
trustee-to-trustee single-sum cash rollover payment between qualified plans, or22
payment made directly to a conduit individual retirement account, but death benefits23
may be paid in the form of a single-sum cash payment paid directly to the24
beneficiary or estate, whichever is applicable.25
(3) The board of trustees may approve any of the following single-sum cash26
payments:27
(a) Direct transfers by and between companies.28
(b) Death benefits.29 HLS 10RS-558 ORIGINAL
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(c) An initial benefit payable upon retirement, provided such benefit is1
approved by the contracting company. The initial benefit shall not exceed an amount2
equal to the participant's monthly benefit, payable as a single-life annuity times3
thirty-six.4
(4) Participants in the defined contribution plan shall not be entitled to any5
benefits to which members in the defined benefit plan are entitled, including but not6
limited to disability benefits, survivor benefits, participation in the Deferred7
Retirement Option Plan, and any cost-of-living adjustments or permanent benefit8
increases granted to retirees of the defined benefit plan; however, the services or9
products offered by a provider may provide for disability or survivor benefits.10
C. Participation in the defined contribution plan shall not preclude11
participation in the Office of Group Benefits if the defined contribution plan12
participant or retiree would otherwise be entitled to participate in the Office of Group13
Benefits in accordance with applicable laws and regulations.14
D. Defined contribution plan participants and providers shall be responsible15
for complying with all applicable provisions of the Internal Revenue Code, and if16
any violation of that code occurs as a result of the participant's participation in the17
optional retirement plan, it shall be the responsibility and liability of the participant18
and the provider and not the state retirement system.19
E. There shall be no liability on the part of and no cause of action of any20
nature shall arise against a state retirement system, or its agents or employees, for21
any action taken in the performance of the duties under this Subpart.22
Section 2. This Act shall become effective on July 1, 2010; if vetoed by the governor23
and subsequently approved by the legislature, this Act shall become effective on July 1,24
2010, or on the day following such approval by the legislature, whichever is later.25 HLS 10RS-558 ORIGINAL
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Tucker HB No. 930
Abstract: Relative to state retirement systems, establishes a defined contribution plan for
members of such plans who are hired on or after Jan. 1, 2011.
Present law generally provides for a defined benefit plan for members of state retirement
systems, whereby a certain determinable benefit is provided upon retirement which is
typically calculated using the following method: [(years of service) x (accrual rate, typically
2.5% to 3%)] x Final Average Compensation. The state retirement systems are:
(1)Louisiana State Employees' Retirement System (LASERS).
(2)Teachers' Retirement System of Louisiana (TRSL).
(3)Louisiana School Employees' Retirement System (LSERS).
(4)State Police Pension and Retirement System (LSPRS).
Proposed law establishes a defined contribution (DC) plan within each state retirement
system for any member first employed or reemployed on or after Jan. 1, 2011. Any person
reemployed on or after Jan. 1, 2011, shall retain any accrued rights in another public
retirement system that he attained prior to that date, but shall be enrolled in the DC plan on
or after Jan. 1, 2011.
Proposed law provides that each state retirement system shall be responsible for the
administration and maintenance of its respective DC plan, and the board of trustees of each
system may promulgate any rules or regulations necessary for such purpose and for
maintaining compliance with the U.S. Internal Revenue Code.
Proposed law requires the board of trustees of each state system to select and contract with
no more than three DC plan providers and in so doing shall consider certain criteria.
Furthermore, the board shall ensure that certain information is provided to plan participants.
Proposed law provides that employee contributions to the DC plan shall be 10%, and
employer contributions shall be 5.25% of payroll.
Proposed law provides that a participant shall immediately acquire a property right in and
to his employee contributions together with interest upon commencement of participation.
Provides that the participant shall acquire a property right in and to all employer
contributions plus interest upon attainment of five years of participation in the DC plan.
Proposed law provides that DC plan benefits are not the obligation of the state. Furthermore,
requires benefits to be payable in the form of a lifetime annuity, except under certain limited
circumstances.
Proposed law provides that participation in the DC plan shall not preclude participation in
the Office of Group Benefits if the DC plan participant would otherwise be entitled to such
participation.
Proposed law provides that there will be no liability or cause of action against a state
retirement system for actions taken in performance of proposed law. HLS 10RS-558 ORIGINAL
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Effective July 1, 2010.
(Adds R.S. 11:331-336)