HLS 12RS-288 ORIGINAL
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Regular Session, 2012
HOUSE BILL NO. 985
BY REPRESENTATIVE THOMPSON
RETIREMENT/STATE SYSTEMS: Provides for a defined contribution retirement plan for
new hires of all state retirement systems
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
establishment of a defined contribution plan within each state retirement system; to4
provide for the creation of such plans; to provide relative to contributions and5
benefits; to provide for an effective date; and to provide for related matters.6
Notice of intention to introduce this Act has been published7
as provided by Article X, Section 29(C) of the Constitution8
of Louisiana.9
Be it enacted by the Legislature of Louisiana:10
Section 1. Subpart P of Part II of Chapter 4 of Subtitle I of Title 11 of the Louisiana11
Revised Statutes of 1950, comprised of R.S. 11:331 through 336, is hereby enacted to read12
as follows: 13
SUBPART P. MANDATORY DEFINED CONTRIBUTION PLAN;14
STATE SYSTEMS15
§331. Creation of defined contribution plans; state systems16
A. Notwithstanding any provision of law to the contrary, there is hereby17
created a defined contribution plan in each of the state retirement systems, in which18
participation is mandatory for any person who is first employed or reemployed on19
or after January 1, 2013, and who is otherwise eligible to become a member of a state20 HLS 12RS-288 ORIGINAL
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retirement system. For purposes of this Subpart, the term "state retirement systems"1
or "systems", shall mean the following retirement systems, plans, or funds:2
(1) Louisiana State Employees' Retirement System.3
(2) Teachers' Retirement System of Louisiana.4
(3) State Police Pension and Retirement System.5
(4) Louisiana School Employees' Retirement System.6
B. Those persons required by this Subpart to participate in the defined7
contribution plan of their respective system shall not be considered eligible for any8
benefits provided by the defined benefit plan of that system and shall not attain any9
service credit in the defined benefit plan; however, any person who is reemployed10
on or after January 1, 2013, and who has accrued any rights or benefits by virtue of11
membership in any state retirement system or other public retirement system before12
that date shall retain such rights and benefits, but shall participate exclusively in the13
defined contribution plan established by this Subpart on and after January 1, 2013.14
§332. Administration15
Each state retirement system or its successor in interest shall provide for the16
administration and maintenance of its respective defined contribution plan. The17
board of trustees of each system may promulgate rules necessary for such18
administration and maintenance and rules necessary for complying with applicable19
provisions of the Internal Revenue Code.20
§333. Selection of providers; criteria for placement of contracts21
A. The board of trustees of each state retirement system shall select and22
contract with no more than three providers with which participants may place their23
contributions in products selected by the board. In selecting the providers, the board24
shall consider among other things the following:25
(1) The tax status of a product.26
(2) The portability of a product offered by a provider.27
(3) The types of products offered by a provider.28 HLS 12RS-288 ORIGINAL
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(4) The relation of the costs and benefits as relates to the amount of the1
contributions to be made pursuant to the provisions of this Subpart.2
(5) The ability of the designated provider or providers to provide the rights3
and benefits under the products.4
(6) The nature and extent of the rights and benefits to be provided by the5
contracts for participating employees and their beneficiaries.6
(7) The suitability of the rights and benefits relative to the needs and7
interests of participants.8
(8) The ability of the provider to provide educational services and materials9
to participants.10
(9) The methods available for participants to interact with the provider11
company; the means by which participants may access account information, direct12
investment of contributions, make changes to their accounts, transfer monies13
between available investment vehicles, and transfer monies between provider14
companies; and any fees that apply to such activities.15
(10) An evaluation of specific investment products, taking into account each16
product's experience in meeting its investment return objectives net of all related17
fees, expenses, and charges, including but not limited to investment management18
fees, distribution and marketing fees, custody fees, recordkeeping fees, education19
fees, annuity expenses, and consulting fees.20
(11) Organizational factors, including but not limited to the financial21
solvency of the provider, its organizational depth, and its experience in providing22
institutional and retail investment services.23
B. The board shall ensure that each participant is provided a quarterly24
statement that accounts for the contributions made on behalf of such participant; the25
interest and investment earnings thereon; and any fees, penalties, or other deductions26
that apply thereto. At a minimum, such statements shall:27
(1) Indicate the participant's investment options.28 HLS 12RS-288 ORIGINAL
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(2) State the market value of the account at the close of the current quarter1
and previous quarter.2
(3) Show account gains and losses for the period and changes in account3
accumulation unit values for the period.4
(4) Itemize account contributions for the quarter.5
(5) Indicate account changes due to adjustment of contribution levels,6
reallocation of contributions, balance transfers, or withdrawals.7
(6) Set forth any fees, charges, penalties, and deductions that apply to the8
account.9
(7) Indicate the amount of the account in which the participant is fully vested10
and the amount of the account in which the participant is not vested.11
(8) Indicate each investment product's performance relative to an appropriate12
market benchmark. 13
§334. Contributions14
A.(1) Each participant shall make a ten percent employee contribution15
monthly. Each employer participating in a state retirement system shall contribute16
on behalf of each participant five and one quarter percent of pay on a monthly basis.17
(2) The entirety of such contributions, less any monthly fee established by18
the board of trustees to cover the cost of administration and maintenance of the19
defined contribution plan, shall be remitted by the system to the applicable20
designated provider for crediting to the participant's account or accounts.21
B. Notwithstanding the provisions of Subsection A of this Section, the22
system shall not remit any funds or contributions to a provider from an employer23
until the correct and total amount to be remitted to the system is received each month24
from the employer.25
§335. Vesting26
A participant shall be vested upon attainment of five years of service with an27
employer participating in a state retirement system. For purposes of this Subpart,28
"vesting" means the acquisition of a property right to all employer contributions29 HLS 12RS-288 ORIGINAL
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credited to a participant's account together with all interest attributable thereto. Upon1
commencement of participation in the defined contribution plan, a participant shall2
acquire an immediate property right to all employee contributions credited to his3
account together with interest attributable thereto.4
§336. Benefits5
A. The benefits payable to participants of a defined contribution plan6
established under this Subpart are not the obligations of the state of Louisiana or any7
state retirement system; rather, such benefits and other rights of the defined8
contribution plan are the sole liability and responsibility of the designated provider9
to which contributions have been made.10
B.(1) Benefits shall be payable to defined contribution plan participants or11
their beneficiaries by the designated provider and not by the respective state12
retirement system in accordance with the contract types provided by the provider and13
the contracts approved for use in the defined contribution plan by the board.14
(2) Subject to the provisions of the contract, retirement benefits shall be paid15
in the form of a lifetime income, unless the participant or beneficiary requests a16
trustee-to-trustee single-sum cash rollover payment between qualified plans, or17
payment made directly to a conduit individual retirement account, but death benefits18
may be paid in the form of a single-sum cash payment paid directly to the19
beneficiary or estate, whichever is applicable.20
(3) The board of trustees may approve any of the following single-sum cash21
payments:22
(a) Direct transfers by and between companies.23
(b) Death benefits.24
(c) An initial benefit payable upon retirement, provided such benefit is25
approved by the contracting company. The initial benefit shall not exceed an amount26
equal to the participant's monthly benefit, payable as a single-life annuity times27
thirty-six.28 HLS 12RS-288 ORIGINAL
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(4) Participants in the defined contribution plan shall not be entitled to any1
benefits to which members in the defined benefit plan are entitled, including but not2
limited to disability benefits, survivor benefits, participation in the Deferred3
Retirement Option Plan, or cost-of-living adjustments or permanent benefit increases4
granted to retirees of the defined benefit plan; however, the services or products5
offered by a provider may provide for disability or survivor benefits.6
C. Participation in the defined contribution plan shall not preclude7
participation in the Office of Group Benefits if the defined contribution plan8
participant or retiree would otherwise be entitled to participate in the Office of Group9
Benefits in accordance with applicable laws and regulations.10
D. Defined contribution plan participants and providers shall be responsible11
for complying with all applicable provisions of the Internal Revenue Code, and if12
any violation of that code occurs as a result of the participant's participation in the13
optional retirement plan, it shall be the responsibility and liability of the participant14
and the provider and not the state retirement system.15
E. There shall be no liability on the part of and no cause of action of any16
nature shall arise against a state retirement system or its agents or employees for any17
action taken in the performance of the duties under this Subpart.18
Section 2. This Act shall become effective on July 1, 2012; if vetoed by the governor19
and subsequently approved by the legislature, this Act shall become effective on July 1,20
2012, or on the day following such approval by the legislature, whichever is later.21
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)]
Thompson HB No. 985
Abstract: Relative to state retirement systems, establishes a defined contribution plan for
members of such plans who are hired on or after Jan. 1, 2013.
Present law generally provides for a defined benefit plan for members of state retirement
systems, whereby a certain determinable benefit is provided upon retirement; the benefit 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: HLS 12RS-288 ORIGINAL
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(1)La. State Employees' Retirement System (LASERS).
(2)Teachers' Retirement System of La. (TRSL).
(3)La. 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, 2013. Any person
reemployed on or after Jan. 1, 2013, 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, 2013.
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; specifies criteria to be used in evaluating providers.
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 thereon 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 thereon 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.
Effective July 1, 2012.
(Adds R.S. 11:331-336)