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Regular Session, 2011
SENATE BILL NO. 9
BY SENATOR GAUTREAUX
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
RETIREMENT CREDIT. Allows members of the Louisiana State Employees' Retirement
System to purchase service credit for purposes of retirement eligibility. (7/1/11)
AN ACT1
To amend and reenact R.S. 11:429(B), relative to the purchase of service credit in the2
Louisiana State Employees' Retirement System; to provide for the purchase of3
service credit and the use of such credit for the purpose of attaining eligibility for4
retirement; to provide relative to the payment of insurance premiums for individuals5
purchasing such service credit; to provide for an effective date; and to provide for6
related matters.7
Notice of intention to introduce this Act has been published.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 11:429(B) is hereby amended and reenacted to read as follows: 10
ยง429. Purchase of service credit11
* * *12
B.(1) Notwithstanding any other provision of law to the contrary, any13
member of the system who has credit in the system for at least five years of service14
shall be eligible to obtain credit for up to five years of service credit in one-year15
increments provided that he shall apply to the system for such credit and pay to the16
system the greater of the amount calculated in accordance with the actuarial cost17 SB NO. 9
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provisions of R.S. 11:158 or the employee and employer contributions plus interest1
based on the member's current salary, which totally offsets the increase in accrued2
liability of the system resulting from the receipt of the credit by the member.3
Employee and employer contributions shall be based on a hypothetical annual4
employment history for the number of years of service purchased starting with5
the June thirtieth prior to the purchase date and working back until the entire6
period of service being purchased is accounted for. Employee and employer7
contribution rates applicable to the fiscal years in the hypothetical history shall8
be the rates applicable for the member and for his employer for those years.9
Salaries in the hypothetical history shall be equal to the actual salaries earned10
by the member during those periods if the person was a member of the system,11
or derived from the salary increase assumption used in the most recent12
actuarial valuation if the person was not a member of the system. All employee13
and employer contributions are assumed to be made in the middle of the fiscal14
year. Interest, based on the interest rate used in the most recent actuarial15
valuation shall be calculated from the assumed payment date to the date of the16
purchase of service credit pursuant to this Paragraph. The amount to be paid17
shall be paid in one lump sum, and no service credit shall be given to the member18
until or unless the amount is paid in full. Any credit purchased pursuant to this19
Subsection Paragraph shall be used for calculation of benefits only and shall not be20
used for purposes of attaining eligibility for retirement except as otherwise21
authorized in this Subsection.22
(2) Notwithstanding any other provision of law to the contrary, any23
member of the system who has credit in the system for at least five years of24
service shall be eligible to obtain credit for purposes of attaining eligibility for25
retirement and calculation of benefits for up to five years of service credit in26
one-year increments provided that he shall apply to the system for such credit27
and pay the greater of the amount calculated in accordance with the actuarial28
cost provisions of R.S. 11:158 or the employee and employer contributions plus29 SB NO. 9
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
interest based on the member's current salary, which totally offsets the increase1
in accrued liability of the system resulting from the receipt of the credit by the2
member. Employee and employer contributions shall be based on a3
hypothetical annual employment history for the number of years of service4
purchased starting with the June thirtieth prior to the purchase date and5
working back until the entire period of service being purchased is accounted6
for. Employee and employer contribution rates applicable to the fiscal years in7
the hypothetical history shall be the rates applicable for the member and for his8
employer for those years. Salaries in the hypothetical history shall be equal to9
the actual salaries earned by the member during those periods if the person was10
a member of the system, or derived from the salary increase assumption used11
in the most recent actuarial valuation if the person was not a member of the12
system. All employee and employer contributions are assumed to be made in13
the middle of the fiscal year. Interest, based on the interest rate used in the14
most recent actuarial valuation shall be calculated from the assumed payment15
date to the date of the purchase of service credit pursuant to this Paragraph.16
The amount to be paid shall be paid in one lump sum, and no service credit shall17
be given to the member until or unless the amount is paid in full.18
(3) Notwithstanding any other provision of law to the contrary, any19
member of the system who has purchased service credit under the provisions20
of Paragraph (1) of this Subsection shall be eligible to upgrade all or a portion21
of the service credit previously purchased for calculation of benefits to service22
credit for attaining eligibility and benefit calculation in one-year increments23
provided that he shall apply to the system for such credit and pay to the system24
the amount calculated in accordance with the actuarial cost provisions of R.S.25
11:158, less the amount, if any, by which any employee and employer26
contributions plus interest paid by the member at the time of the previous27
purchase, exceeded the actuarial cost under R.S. 11:158 at the time of the28
previous purchase, inclusive of interest on any such excess at the board-29 SB NO. 9
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approved actuarial rate from the date of the previous purchase to the date of1
the upgrade, but not less than zero, which totally offsets the increase in accrued2
liability of the system resulting from the receipt of the credit by the member.3
The amount to be paid shall be paid in one lump sum, and no service credit shall4
be given to the member until or unless the amount is paid in full.5
(4) Notwithstanding any other provision of law to the contrary, the6
premiums for health insurance coverage paid by any retiree participating in the7
office of group benefits program who has purchased service credit pursuant to8
Paragraph (2) or (3) of this Subsection, and who retires earlier than he would9
otherwise have been eligible for regular retirement without such purchased10
credit, shall be increased by an amount sufficient to pay for any increase in the11
employer's premiums that results from such retirement. Such increase in the12
retiree's premium shall be deducted from the retiree's monthly benefit and13
remitted to the office of group benefits to offset the employer's premium14
payments by such amount. The premium payments made pursuant to this15
Paragraph shall cease when the retiree attains the age at which his earned16
creditable service, not including service purchased pursuant to this Subsection,17
would have been sufficient to meet eligibility requirements for regular18
retirement. 19
Section 2. This Act shall become effective on July 1, 2011; if vetoed by the governor20
and subsequently approved by the legislature, this Act shall become effective on July 1,21
2011, or on the day following such approval by the legislature, whichever is later.22
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Lauren Bailey.
DIGEST
Gautreaux (SB 9)
Present law (R.S. 11:429(B)) permits any member of the Louisiana State Employees'
Retirement System (LASERS) who has credit in the system for at least five years of service
to purchase up to five years of service credit in one-year increments to be used for
calculation of benefits only and not for purposes of attaining retirement eligibility. Provides
that the member shall apply to the system for such credit and pay to the system the greater
of the amount calculated in accordance with the actuarial cost provisions of present law or
the employee and employer contributions plus interest based on the member's current salary, SB NO. 9
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which totally offsets the increase in accrued liability of the system resulting from such
purchase of service credit. Provides the amount to be paid shall be paid in one lump sum,
and no service credit shall be given to the member until or unless the amount is paid in full.
Proposed law retains present law.
New purchase of service credit:
Proposed law provides that any member of LASERS who has credit in the system for at least
five years of service shall be eligible to purchase up to five years of service credit in one-
year increments for purposes of attaining eligibility for retirement and calculation of
benefits.
Upgrade of previously purchased service credit:
Proposed law provides for an upgrade of service credit previously purchased for benefit
calculation only pursuant to present law (R.S. 11:429(B)) to service credit applicable to both
calculation of benefits and retirement eligibility.
Proposed law provides for application, calculation of purchase price, and lump-sum payment
for a new purchase or an upgrade as provided in present law.
Proposed law provides that any member who elects to upgrade previously purchased credit
shall receive an offset in cost equal to the amount, if any, by which the employee and
employer contributions plus interest based on the member's current salary, exceeded the
actuarial cost under R.S. 11:158 at the time of the previous purchase, inclusive of interest
on any such excess at the board-approved actuarial rate from the date of the previous
purchase to the date of the upgrade.
Proposed law requires any retiree who purchased service credit under proposed law to pay
any increase in his Office of Group Benefits health insurance premium to cover any increase
in premium that would otherwise be paid by his employer as a result of the retirement only
if the member retires earlier than he would otherwise have been eligible to retire without his
purchase of service credit.
Proposed law provides that the increased premium payments shall cease when the retiree
attains the age at which his earned creditable service, not including service purchased
pursuant to proposed law, would have been sufficient to meet eligibility requirements for
regular retirement.
Effective July 1, 2011.
(Amends R.S. 11:429(B))
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Retirement to the
original bill.
1. Provides that a member who elects to upgrade previously purchased credit
shall receive an offset in cost equal to the amount, if any, by which the
employee and employer contributions plus interest based on the member's
current salary, exceeded the actuarial cost under R.S. 11:158 at the time of
the previous purchase, inclusive of interest on any such excess at the board-
approved actuarial rate from the date of the previous purchase to the date of
the upgrade. SB NO. 9
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2. Clarifies that a member must pay any increase in his Office of Group
Benefits health insurance premium to cover any increase in premium that
would otherwise be paid by his employer as a result of his retirement only if
he retires earlier than he would otherwise have been eligible to retire without
his purchase of service credit.
3. Provides that the increased premium payments shall cease when the retiree
attains the age at which his earned creditable service, not including service
purchased pursuant to this Act, would have been sufficient to meet eligibility
requirements for regular retirement.