ENROLLED
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ACT No. 483
Regular Session, 2012
HOUSE BILL NO. 61
BY REPRESENTATIVE PEARSON
AN ACT1
To amend and reenact R.S. 11:62(4)(introductory paragraph), (5)(introductory paragraph),2
and (11)(introductory paragraph), 102(B)(1) and (3)(a) and (d)(v), (vi), and (vii),3
542(A)(2)(a), 883.1(A)(2)(a), and 1145.1(A)(1)(introductory paragraph) and (a),4
(C)(4)(a)(introductory paragraph), and (E), and to enact R.S. 11:62(4.1), (5.1), and5
(11.1), 102(C)(1)(m), 542(C)(4)(d)(iii) and (e)(iii), 883.1(C)(4)(d)(iii) and (e)(iii),6
1145.1(C)(4)(a)(iii) and (b)(iii), and Chapter 7 of Subtitle II of Title 11 of the7
Louisiana Revised Statutes of 1950, to be comprised of R.S. 11:1399.1 through8
1399.7, relative to state retirement systems; to create a cash balance plan in certain9
state systems; to provide for contributions, credits, eligibility, and benefits; to10
provide for an effective date; and to provide for related matters.11
Notice of intention to introduce this Act has been published12
as provided by Article X, Section 29(C) of the Constitution13
of Louisiana.14
Be it enacted by the Legislature of Louisiana:15
Section 1. R.S. 11:62(4)(introductory paragraph), (5)(introductory paragraph), and16
(11)(introductory paragraph), 102(B)(1) and (3)(a) and (d)(v), (vi), and (vii), 542(A)(2)(a),17
883.1(A)(2)(a), and 1145.1(A)(1)(introductory paragraph) and (a), (C)(4)(a)(introductory18
paragraph), and (E) are hereby amended and reenacted and R.S. 11:62(4.1), (5.1), and (11.1),19
102(C)(1)(m), 542(C)(4)(d)(iii) and (e)(iii), 883.1(C)(4)(d)(iii) and (e)(iii),20
1145.1(C)(4)(a)(iii) and (b)(iii), and Chapter 7 of Subtitle II of Title 11 of the Louisiana21 ENROLLEDHB NO. 61
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Revised Statutes of 1950, comprised of R.S. 11:1399.1 through 1399.7, are hereby enacted1
to read as follows:2
§62. Employee contribution rates established3
Employee contributions to state and statewide public retirement systems shall4
be paid at the following rates, except as otherwise provided by law:5
* * *6
(4) Louisiana School Employees' Retirement System members in Tier 1:7
* * *8
(4.1) Louisiana School Employees' Retirement System members in the cash9
balance plan - 8%.10
* * *11
(5) Louisiana State Employees' Retirement System members in Tier 1:12
* * *13
(5.1) Louisiana State Employees' Retirement System members in the cash14
balance plan - 8%.15
* * *16
(11) Teachers' Retirement System of Louisiana members in Tier 1:17
* * *18
(11.1) Teachers' Retirement System of Louisiana members in the cash19
balance plan - 8%.20
* * *21
§102. Employer contributions; determination; state systems22
* * *23
B.(1) Except as provided in Subsection C of this Section for the Louisiana24
State Employees' Retirement System and except as provided in R.S. 11:102.1 and25
102.2 and in Paragraph (5) of this Subsection, for each fiscal year, commencing with26
Fiscal Year 1989-1990, for each of the public retirement systems referenced in27
Subsection A of this Section, the legislature shall set the required employer28
contribution rate equal to the actuarially required employer contribution, as29
determined under Paragraph (3) of this Subsection, divided by the total projected30 ENROLLEDHB NO. 61
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payroll of all active members including cash balance plan members of each1
particular system for the fiscal year. Each entity funding a portion of a member's2
salary shall also fund the employer's contribution on that portion of the member's3
salary at the employer contribution rate specified in this Subsection.4
* * *5
(3) With respect to each state public retirement system, the actuarially6
required employer contribution for each fiscal year, commencing with Fiscal Year7
1989-1990, shall be that dollar amount equal to the sum of:8
(a) The employer's normal cost for that fiscal year, computed as of the first9
of the fiscal year using the system's actuarial funding method as specified in R.S.10
11:22 and taking into account the value of future accumulated employee11
contributions and interest thereon, such employer's normal cost rate multiplied by the12
total projected payroll for all active members including cash balance plan members13
to the middle of that fiscal year. For the Louisiana State Employees' Retirement14
System, effective for the June 30, 2010, system valuation and beginning with Fiscal15
Year 2011-2012, the normal cost shall be determined in accordance with Subsection16
C of this Section.17
* * *18
(d) That fiscal year's payment, computed as of the first of that fiscal year and19
projected to the middle of that fiscal year at the actuarially assumed interest rate,20
necessary to amortize changes in actuarial liability due to:21
* * *22
(v) Effective July 1, 2004, and beginning with Fiscal Year 1998-1999, the23
amortization period for the changes, gains, or losses of the Louisiana State24
Employees' Retirement System provided in Items (i) through (iv) of this25
Subparagraph shall be thirty years, or in accordance with standards promulgated by26
the Governmental Accounting Standards Board, from the year in which the change,27
gain, or loss occurred. The outstanding balances of amortization bases established28
pursuant to Items (i) through (iv) of this Subparagraph before Fiscal Year29
1998-1999, shall be amortized as a level dollar amount from July 1, 2004, through30 ENROLLEDHB NO. 61
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June 30, 2029. Beginning with Fiscal Year 2003-2004, and for each fiscal year1
thereafter, the outstanding balances of amortization bases established pursuant to2
Items (i) through (iv) of this Subparagraph and for any changes, gains, or losses3
attributable to the cash balance plan shall be amortized as a level dollar amount. For4
the Louisiana State Employees' Retirement System, effective for the June 30, 2010,5
system valuation and beginning with Fiscal Year 2011-2012, amortization payments6
for changes in actuarial liability shall be determined in accordance with Subsection7
C of this Section.8
(vi) Effective July 1, 2004, and beginning with Fiscal Year 2000-2001, the9
amortization period for the changes, gains, or losses of the Louisiana School10
Employees' Retirement System provided in Items (i) through (iv) of this11
Subparagraph and for any changes, gains, or losses attributable to the cash balance12
plan shall be thirty years, or in accordance with standards promulgated by the13
Governmental Accounting Standards Board, from the year in which the change, gain,14
or loss occurred. The outstanding balances of amortization bases established15
pursuant to Items (i) through (iv) of this Subparagraph before Fiscal Year 2000-16
2001, shall be amortized as a level dollar amount from July 1, 2004, through June 30,17
2029. Beginning with Fiscal Year 2003-2004, and for each fiscal year thereafter, the18
outstanding balances of amortization bases established pursuant to Items (i) through19
(iv) of this Subparagraph shall be amortized as a level dollar amount.20
(vii) Effective July 1, 2004, and beginning with Fiscal Year 2000-2001, the21
amortization period for the changes, gains, or losses of the Teachers' Retirement22
System of Louisiana provided in Items (i) through (iv) of this Subparagraph and for23
any changes, gains, or losses attributable to the cash balance plan shall be thirty24
years, or in accordance with standards promulgated by the Governmental Accounting25
Standards Board, from the year in which the change, gain, or loss occurred. The26
outstanding balances of amortization bases established pursuant to Items (i) through27
(iv) of this Subparagraph before Fiscal Year 2000-2001, shall be amortized as a level28
dollar amount from July 1, 2004, through June 30, 2029. Beginning with Fiscal Year29
2003-2004, and for each fiscal year thereafter, the outstanding balances of30 ENROLLEDHB NO. 61
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amortization bases established pursuant to Items (i) through (iv) of this Subparagraph1
shall be amortized as a level dollar amount.2
* * *3
C.(1) This Subsection shall be applicable to the Louisiana State Employees'4
Retirement System effective for the June 30, 2010, system valuation and beginning5
Fiscal Year 2011-2012. For purposes of this Subsection, "plan" or "plans" shall6
mean a subgroup within the system characterized by the following employee7
classifications:8
* * *9
(m) Members in the cash balance plan.10
* * *11
§542. Experience account12
A.13
* * *14
(2) The experience account shall be credited as follows:15
(a) To the extent permitted by Paragraph (3) of this Subsection and after16
allocation to the consolidated amortization bases as provided in R.S. 11:102.1, an17
amount not to exceed fifty percent of the remaining balance of the prior year's net18
investment experience gain attributable to Tier 1 assets as determined by the system's19
actuary.20
* * *21
C.22
* * *23
(4)24
* * *25
(d) Except as provided in Subparagraph (c) of this Paragraph, in order to be26
eligible for any permanent benefit increase payable on or after July 1, 2009, there27
shall be the funds available in the experience account to pay for such an increase, and28
a retiree:29
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(iii) Shall be a member of Tier 1.1
(e) Except as provided in Subparagraph (c) of this Paragraph, a nonretiree2
beneficiary shall be eligible for the permanent benefit increase payable on or after3
July 1, 2009:4
* * *5
(iii) If the benefits are based on Tier 1 service.6
* * *7
§883.1. Experience account8
A.9
* * *10
(2) The experience account shall be credited as follows:11
(a) To the extent permitted by Paragraph (3) of this Subsection and after12
allocation to the consolidated amortization bases as provided in R.S. 11:102.2, an13
amount not to exceed fifty percent of the remaining balance of the prior year's net14
investment experience gain attributable to Tier 1 assets as determined by the system's15
actuary.16
* * *17
C.18
* * *19
(4)20
* * *21
(d) Except as provided in Subparagraph (c) of this Paragraph, in order to be22
eligible for any permanent benefit increase payable on or after July 1, 2009, there23
shall be the funds available in the experience account to pay for such an increase, and24
a retiree:25
* * *26
(iii) Shall be a member of Tier 1.27 ENROLLEDHB NO. 61
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(e) Except as provided in Subparagraph (c) of this Paragraph, a nonretiree1
beneficiary shall be eligible for the permanent benefit increase payable on or after2
July 1, 2009:3
* * *4
(iii) If the benefits are based on Tier 1 service.5
* * *6
§1145.1. Employee Experience Account account7
A.(1) The Employee Experience Account experience account shall be8
credited as follows:9
(a) To the extent permitted by Paragraph (2) of this Subsection, an amount10
not to exceed fifty percent of the prior year's net investment experience gain11
attributable to Tier 1 assets as determined by the system's actuary.12
* * *13
C.14
* * *15
(4)(a) Except as provided in Subparagraph (c) of this Paragraph, in order to16
be eligible for the cost-of-living adjustment, there shall be the funds available in the17
Employee Experience Account experience account to pay for such an adjustment,18
and a retiree:19
* * *20
(iii) Shall be a member of Tier 1.21
(b) Except as provided in Subparagraph (c) of this Paragraph, a non-retiree22
beneficiary shall be eligible for the cost-of-living adjustment:23
* * *24
(iii) If benefits are based on Tier 1 service.25
* * *26
E. Effective July 1, 2007, the balance in the Employee Experience Account27
experience account shall be zero.28
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CHAPTER 7. CASH BALANCE PLAN FOR STATE RETI REMENT SYSTEMS1
§1399.1. Cash balance plan creation2
A. There is hereby created within each of the following state retirement3
systems a cash balance plan:4
(1) Louisiana State Employees' Retirement System.5
(2) Teachers' Retirement System of Louisiana.6
(3) Louisiana School Employees' Retirement System.7
B. The provisions of each system in effect on June 30, 2013, including any8
special plans, shall be known as "Tier 1".9
§1399.2. Cash balance plan membership10
A. The following employees whose first employment making them eligible11
for membership in one of the state systems occurred on or after July 1, 2013, shall12
be members of the cash balance plan of their respective systems:13
(1) Employees covered by the Louisiana State Employees' Retirement14
System who are not members of the Hazardous Duty Services Plan pursuant to R.S.15
11:612.16
(2) Employees covered by the Teachers' Retirement System of Louisiana17
who are employed by institutions of postsecondary education or postsecondary18
education management boards, who do not become members of the optional19
retirement plan, and who are not employed for the sole purpose of providing20
instruction or administrative services at the primary or secondary level, including at21
any lab school and the Louisiana School for Math, Science, and the Arts.22
B.(1) Except as provided in Paragraph (2) of this Subsection, any employee23
whose first employment making him eligible for membership in one of the state24
systems listed in R.S. 11:1399.1(A) occurred on or after July 1, 2013, may within25
sixty days after his employment date make an irrevocable election to join the cash26
balance plan of the retirement system.27
(2) No member of the Hazardous Duty Services Plan shall be permitted to28
elect to join the cash balance plan.29 ENROLLEDHB NO. 61
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§1399.3. Cash balance plan account accumulation1
A. Contributions. (1) Each employee shall contribute to the retirement2
system the amount specified in R.S. 11:62 for cash balance plan members.3
(2) Employer contributions to each retirement system shall be as provided4
in R.S. 11:102.5
B. Credits. The cash balance plan member's account shall be credited with6
an amount equal to twelve percent of pay monthly. The credits shall include all7
employee contributions.8
C. Interest. (1) For the duration of service covered by the cash balance plan,9
interest shall be payable on the member's account each plan year at a rate equal to10
the system's actuarial rate of return as certified by the system actuary in the system's11
actuarial valuation, less one percent. Interest shall be credited after the Public12
Retirement Systems' Actuarial Committee adopts the system's valuation containing13
the actuarial rate of return on investments, and shall be based on the balance of the14
account at the end of each month for the prior plan year.15
(2) No interest shall be credited after the member separates from service16
covered by the cash balance plan of his retirement system, except that interest shall17
be credited for those months during the plan year prior to his separation from service.18
(3) In no case shall the balance in the employee's account be debited for19
investment losses.20
D. Withdrawal from the cash balance plan. A cash balance plan member21
who separates from employment covered by his retirement system may withdraw22
from the cash balance plan.23
(1) Upon application for withdrawal, an employee who has been a cash24
balance plan member for less than five years shall receive a refund of employee25
contributions without interest. The system shall retain all interest and any employer26
contributions.27
(2) Upon application for withdrawal, an employee who has been a cash28
balance plan member for five years or longer may receive a lump-sum payment of29
his account balance or the distribution of his total account balance in the form of a30 ENROLLEDHB NO. 61
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trustee-to-trustee, single-sum transfer between qualified plans or as a payment made1
directly to a conduit individual retirement account. The employee may opt to leave2
his account balance with the system and draw an annuity pursuant to R.S. 11:1399.43
when he attains age sixty.4
(3)(a) A cash balance plan member shall be eligible to utilize the years of his5
membership in the cash balance plan for purposes of reciprocal recognition of6
credited service pursuant to R.S. 11:142.7
(b) A cash balance plan member who elects to withdraw from the cash8
balance plan after becoming a member of a cash balance plan in another Louisiana9
public retirement system may execute the withdrawal provided for in this Subsection10
to transfer the amount the member is entitled to receive pursuant to Paragraphs (1)11
or (2) of this Subsection to a cash balance plan in another retirement system.12
(4) If a cash balance plan member dies without withdrawing from the cash13
balance plan pursuant to this Subsection or annuitizing his benefit pursuant to R.S.14
11:1399.4, the following shall apply:15
(a) The applicable Tier 1 plan shall be the plan in which the member would16
have been enrolled in the absence of the cash balance plan. For purposes of this17
Paragraph, the member's service credit, accrual rate, eligibility, and benefit18
calculation shall be determined as if the member's cash balance service had been19
earned as a member of the applicable Tier 1 plan.20
(b) If the cash balance plan member is survived by a spouse only and the21
cash balance plan member met the eligibility requirements for survivors' benefits in22
the applicable Tier 1 plan, the spouse may choose one of the following options:23
(i) To receive the account balance in the cash balance plan as a lump-sum24
payment; a trustee-to-trustee, single-sum transfer between qualified plans; or a25
payment made directly to a conduit individual retirement account.26
(ii) To receive the applicable Tier 1 survivors' benefit.27
(c) If the cash balance plan member is survived by a minor or by a28
handicapped or mentally disabled child of any age and the cash balance plan member29
met the eligibility requirements for survivors' benefits in the applicable Tier 1 plan,30 ENROLLEDHB NO. 61
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all survivors otherwise qualifying under the Tier 1 plan shall receive the Tier 11
survivors' benefits but shall not receive the cash balance account balance.2
(d) If the cash balance plan member has not met the eligibility requirements3
for survivors' benefits in the applicable Tier 1 plan, the system shall give his4
designated beneficiary or his estate the option to receive his account balance as a 5
lump-sum payment; a trustee-to-trustee, single-sum transfer between qualified plans;6
or a payment made directly to a conduit individual retirement account.7
(e) Subject to the provisions of R.S. 11:1399.7, if a survivor is eligible to and8
elects to receive a Tier 1 survivors' benefit, the account balance in the cash balance9
plan shall be retained by the retirement system.10
(5) If a cash balance plan member becomes disabled before withdrawing11
from the cash balance plan pursuant to this Subsection or annuitizing his benefit12
pursuant to R.S. 11:1399.4, the following shall apply:13
(a) The applicable Tier 1 plan is the plan in which the member would have14
been enrolled in the absence of the cash balance plan. For purposes of this15
Paragraph, the member's service credit, accrual rate, eligibility, and benefit16
calculation shall be determined as if the member's cash balance service had been17
earned as a member of the applicable Tier 1 plan.18
(b) The member may choose one of the following options:19
(i) To receive his cash balance account balance as a lump-sum payment; a20
trustee-to-trustee, single-sum transfer between qualified plans; or a payment made21
directly to a conduit individual retirement account.22
(ii) To receive the applicable Tier 1 disability benefit if the member23
otherwise meets the eligibility requirements for disability benefits in Tier 1.24
(c) Subject to the provisions of R.S.11:1399.7, if a cash balance plan member25
is eligible to and elects to receive a Tier 1 disability benefit, the account balance in26
the cash balance plan shall be retained by the retirement system.27
§1399.4. Retirement eligibility; benefit calculation28
A. Eligibility for retirement. A cash balance plan member with five years29
of membership in the cash balance plan is eligible to draw an annuity beginning at30 ENROLLEDHB NO. 61
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age sixty. The annuity payment amount shall be calculated as provided in1
Subsection B of this Section.2
B. Annuitization of retirement benefit. (1)(a) Upon application, any3
member meeting the qualifications in Subsection A of this Section may elect to4
receive an annuity in a retirement allowance payable throughout his life, or he may5
elect at that time to receive the actuarial equivalent of his retirement allowance in a6
reduced retirement allowance payable throughout life, pursuant to any retirement7
option provided for Tier 1 members of his system. The system shall annuitize and8
pay any such allowance chosen by the member.9
(b) The system shall annuitize the retirement benefit using an annuity rate10
based upon the actuarial assumptions in use by the system as of the date of11
retirement. The system actuary may modify the assumptions to reflect any changes12
quantified in an experience study and incorporated into a valuation adopted by the13
Public Retirement Systems' Actuarial Committee, demonstrating a statistically14
significant difference between the mortality experience of cash balance participants15
in the system electing to receive benefits in an annuity form and that of system16
annuitants generally.17
(2) No member of the cash balance plan shall be eligible to participate in any18
deferred retirement option plan or program or any similar retirement option that19
requires continued employment for participation, nor shall such a member be eligible20
to participate in any back-deferred retirement option plan or program. However, a21
cash balance plan member may participate in any initial benefit option, initial lump-22
sum benefit option, or any similar retirement option designed to provide a reduced23
annuity in exchange for a lump-sum payment which is selected upon separation from24
service.25
§1399.5. Reemployment26
If, after withdrawing from the cash balance plan upon separation from service27
or after annuitizing his benefit, a cash balance plan member becomes reemployed in28
a position covered by the cash balance plan, the person's accumulation in the cash29
balance plan pursuant to R.S. 11:1399.3 shall begin again. However, the30 ENROLLEDHB NO. 61
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reemployment shall not affect the receipt of the lump sum or annuitized payments1
from the first cash balance account.2
§1399.6. Application3
The provisions of the applicable Tier 1 system or plan shall apply to the cash4
balance plan for any matter on which this Chapter is silent. In case of any conflict5
between the provisions of Tier 1 and the cash balance plan, the cash balance plan6
shall prevail.7
§ 1399.7. Guaranteed return of employee contributions8
In no case shall a retirement system pay total benefits of an amount less than9
the total of the employee's accumulated contributions. Where the total benefits10
received prior to an employee's death is less than the employee's total contributions,11
the difference shall be paid to the estate of the decedent.12
Section 2. The Public Retirement Systems' Actuarial Committee may adopt an13
actuarial valuation after implementation of the Act originating as House Bill No. 61 of the14
2012 Regular Legislative Session, to be utilized by a system to which the provisions of this15
Act apply in the fiscal year which begins July 1, 2013, calculated in accordance with R.S.16
11:102, which has been prepared on behalf of the division of administration by a member17
of the American Academy of Actuaries who meets the qualification requirements of the18
academy to issue a particular statement of actuarial opinion.19
Section 3. Because the legislature finds and declares that questions of law may be20
raised concerning provisions of this Act, the public welfare requires that such questions of21
law be expeditiously resolved prior to such time as its provisions take effect to avoid22
disruption of the orderly implementation of its provisions. Therefore, the legislature finds23
that an expedited hearing schedule for actions filed relative to this Act should be24
immediately made available in order to avoid confusion by the public. Venue for any action25
shall be in the Nineteenth Judicial District Court for the Parish of East Baton Rouge. In the26
interest of further expediting this procedure, courts are urged to minimize all unnecessary27
delays and to resolve any questions of law no later than thirty days prior to the prefiling28
deadline for retirement legislation for the 2013 regular legislative session. The courts may29
suspend all applicable rules of court for this limited purpose.30 ENROLLEDHB NO. 61
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Section 4. The division of administration shall study the feasibility of enrolling cash1
balance plan members in Social Security and shall report its findings to the Public2
Retirement Systems Actuarial Committee at the committee's first meeting in 2013.3
Section 5. This Act shall become effective on June 30, 2012; if vetoed by the4
governor and subsequently approved by the legislature, this Act shall become effective on5
June 30, 2012, or on the day following such approval by the legislature, whichever is later.6
Section 6. The division of administration shall conduct a cost benefit analysis of7
providing an increased pay scale for employees hired on or after July 1, 2013, to provide8
employees with the opportunity to develop a retirement plan or other investment9
opportunities in addition to the plan established by this Act.10
SPEAKER OF THE HOUSE OF REPRESENTATI VES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: