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Regular Session, 2010 ENROLLED
SENATE BILL NO. 594
BY SENATORS B. GAUTREAUX, APPEL AND THOMPSON
AN ACT1
To amend and reenact R.S. 11:62(5)(a), 263(C) and (D), 444(A)(1), and the introductory2
paragraph of R.S. 11:553, to enact R.S. 11:263(G) and 551(B), and to repeal R.S.3
11:62(5)(h), 263(E), 267, and 268, relative to public retirement systems; to provide4
for employee contribution rates, computation of benefits, and eligibility; to provide5
relative to the prudent-man rule, investment authority and restrictions, and asset6
allocation; to require quarterly investment reports; to provide for an effective date;7
and to provide for related matters.8
Notice of intention to introduce this Act has been published.9
Be it enacted by the Legislature of Louisiana:10
Section 1. R.S. 11:62(5)(a), 263(C) and (D), 444(A)(1), and the introductory11
paragraph of R.S. 11:553 are hereby amended and reenacted and R.S. 11:263(G) and 551(B)12
are enacted to read as follows:13
§62. Employee contribution rates established14
Employee contributions to state and statewide public retirement systems shall15
be paid at the following rates, except as otherwise provided by law:16
* * *17
(5) Louisiana State Employees' Retirement System:18
(a) Judges, court officers, the governor, lieutenant governor and legislators19
- 11.5%. :20
(i) Employees whose first employment making them eligible for21
membership in one of the state systems occurred on or before December 31,22
2010 - 11.5%.23
(ii) Employees, other than judges in Item (iii) of this Subparagraph,24
whose first employment making them eligible for membership in one of the state25
systems occurred on or after January 1, 2011 - 8%.26 SB NO. 594 ENROLLED
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(iii) Judges holding positions specified in R.S. 11:553(1), (3) through (5),1
(7), and (10) through (15) whose first employment making them eligible for2
membership in one of the state systems occurred on or after January 1, 2011 -3
13%.4
* * *5
§263. Prudent-man rule; investments; reporting6
* * *7
C. This standard requires the exercise of reasonable care, skill, and caution,8
and is to be applied to investments not in isolation, but in the context of the trust9
portfolio, and as part of an overall investment strategy, which shall include an asset10
allocation study and plan for implementation thereof, incorporating risk and return11
objectives reasonably suitable to that trust. The asset allocation study and12
implementation plan shall include the examination of market value risk, credit13
risk, interest rate risk, inflation risk, counterparty risk, and concentration risk.14
The investment policy of each system, plan, or fund shall preserve and enhance15
principal over the long term and provide adequate liquidity and cash flow for16
the payment of benefits. The investments shall be diversified to minimize the17
risk of significant losses unless it is clearly prudent not to do so.18
D.(1) Notwithstanding the prudent-man rule, no governing authority of any19
system or fund governed by this Subpart shall invest more than fifty-five percent of20
the total portfolio in equities, except as provided in Paragraph (2) of this Subsection.21
or in R.S. 11:267.22
(2) The governing authority of any system to which R.S. 11:267(A) is23
inapplicable may invest more than fifty-five percent of the total portfolio in equities,24
so long as not more than sixty-five percent of the total portfolio is invested in25
equities and at least ten percent of the total equity portfolio is invested in one or26
more index funds which seek to replicate the performance of the chosen index or27
indices.28
(3) When contemplating any investment, action, or asset allocation the29
following factors shall be given weight:30 SB NO. 594 ENROLLED
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(a) The availability of public pricing to value each investment.1
(b) The ability to liquidate each investment at a fair market price within2
a reasonable time frame for the size of investment that is being considered.3
(c) The degree of transparency that accompanies each investment.4
(d) The risk of fluctuations in currency that may accompany each5
investment.6
(e) The experience of the professionals who will manage each investment7
and the financial soundness of the business entity employing such professionals.8
(f) The degree of diversification which exists within each investment and9
that such investment itself may provide relative to the other existing10
investments in the system's portfolio.11
(g) Whether leverage is involved.12
(h) The potential for unrelated business taxable income as defined in13
Section 512 of the Internal Revenue Code.14
(i) The jurisdiction of the laws that govern each investment.15
(j) The net return that is expected relative to the risk that is associated16
with each investment.17
* * *18
G.(1) Each system, plan, or fund governed by this Subpart shall submit19
to the House and Senate committees on retirement and to each other state and20
statewide retirement system electronically transmitted quarterly reports21
beginning with the quarter ending June 30, 2010, which shall be submitted no22
later than thirty calendar days after the end of the quarter.23
(2) Each report submitted pursuant to this Subsection shall contain, at24
a minimum, the following:25
(a) The investment return net of investment fees and expenses expressed26
as a percentage return and dollar amount.27
(b) The amount of administrative expenses.28
(c) The board-approved target asset allocation.29
(d) The current actual asset allocation of the system portfolio.30 SB NO. 594 ENROLLED
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(3) Investment returns reported pursuant to this Subsection shall be by1
total fund and particular asset class over the quarter reported, fiscal year-to-2
date, one year, three year, five year, and ten year periods.3
* * *4
§444. Computation of retirement benefit5
A.(1)(a)(i) A member who retires effective on or after July 1, 1973, shall6
receive a maximum retirement allowance equal to two and one-half percent of7
average compensation, as determined under R.S. 11:231, for every year of creditable8
service, plus three hundred dollars.9
(ii) Any member whose first employment making him eligible for10
membership in one of the state systems occurred on or after January 1, 2011,11
shall receive an additional benefit equal to one percent times the number of12
years of creditable service as a judge in a position specified in R.S. 11:553(1), (3)13
through (5), (7), and (10) through (15) times his average compensation.14
(b) The additional sum of three hundred dollars referenced in Subparagraph15
(a) of this Paragraph shall only apply to a person who became a member prior to July16
1, 1986.17
* * *18
§551. Eligibility for membership19
B. Beginning January 1, 2011, the provisions of this Subpart shall not20
be applicable to judges or court officers to whom R.S. 11:553 would otherwise21
apply but whose first employment making them eligible for membership in one22
of the state systems occurred on or after such date. Such persons shall continue23
to be members of the Louisiana State Employees' Retirement System but shall24
be subject to the provisions of this Chapter otherwise applicable to system25
members.26
* * *27
§553. Eligible judges and court officers28
This Subpart shall apply to all present and future judges and court officers29
hereinafter enumerated in this Section whose first employment making them30 SB NO. 594 ENROLLED
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eligible for membership in one of the state systems occurred on or before1
December 31, 2010:2
* * *3
Section 2. R.S. 11:62(5)(h), 263(E), 267, and 268 are hereby repealed.4
Section 3. In the event that the provisions of this Act conflict with the provisions of5
the Act which originated as House Bill 1337 of the 2010 Regular Session of the legislature,6
the provisions of this Act shall supercede and control, regardless of the order of final passage7
or the effective date of either Act.8
Section 4. If any provision or item of this Act, or the application thereof, is held9
invalid, such invalidity shall not affect other provisions, items, or applications of the Act10
which can be given effect without the invalid provision, item, or application and to this end11
the provisions of this Act are hereby declared severable.12
Section 5. This Act shall become effective on July 1, 2010; if vetoed by the governor13
and subsequently approved by the legislature, this Act shall become effective on July 1,14
2010, or on the day following such approval by the legislature, whichever is later.15
PRESIDENT OF THE SENATE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: