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Regular Session, 2012
SENATE BILL NO. 26
BY SENATOR PEACOCK
RETIREMENT BENEFITS. Provides for a defined contribution plan for persons employed
by state agencies and institutions after December 31, 2012, in nonhazardous postions.
(7/1/12)
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 and the Teachers' Retirement System4
of Louisiana; to create a defined contribution plan within such systems; to provide5
relative to contributions and benefits; to provide for an effective date; and to provide6
for 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. Subpart P of Part II of Chapter 4 of Subtitle I of Title 11of the Louisiana10
Revised Statutes of 1950, comprised of R.S. 11:331 through 336, is hereby enacted to read11
as follows:12
SUBPART P. MANDATORY DEFINED CONTRIBUTION PLAN:13
STATE SYSTEMS14
§331. Creation of mandatory defined contribution plans; state systems15
A.(1) Notwithstanding any provision of law to the contrary, there is16
hereby created a defined contribution plan in certain retirement systems, in17 SB NO. 26
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which participation shall be mandatory for the following persons first employed1
or reemployed on or after January 1, 2013, who would otherwise be eligible to2
become members of such state retirement systems:3
(a) Employees covered by the Louisiana State Employees' Retirement4
System who are not members of the Hazardous Duty Service Plan pursuant to5
R.S. 11:612.6
(b) Employees covered by the Teachers' Retirement System of Louisiana7
who are employed by an institution of post-secondary education.8
(2) For purposes of this Subpart, the term "state retirement systems" or9
"systems", shall mean the following retirement systems, plans, or funds:10
(a) Louisiana State Employees' Retirement System.11
(b) Teachers' Retirement System of Louisiana.12
B. Those persons required by this Subpart to participate in the defined13
contribution plans of their respective systems shall not be considered eligible for14
any benefits provided by the defined benefit plan of each respective system and15
shall not earn any service credit in the defined benefit plan; however, any16
person who is reemployed on or after January 1, 2013, who has accrued any17
rights or benefits by virtue of membership in any state retirement system or18
other public retirement system before such date shall retain such rights and19
benefits that have accrued in such system, but shall participate exclusively in20
the defined contribution plan established by this Subpart on or after January21
1, 2013.22
§332. Administration23
Each state retirement system or its successor in interest shall provide for24
the administration and maintenance of its respective defined contribution plan25
established pursuant to this Subpart. The board of trustees of each system may26
promulgate any rules necessary for such administration and maintenance and27
any rules necessary for compliance with applicable provisions of the Internal28
Revenue Code.29 SB NO. 26
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§333. Selection of providers; criteria for placement of contracts1
A. The board of trustees of each state retirement system shall select and2
contract with no more than three providers with which participants shall be3
authorized to place their contributions in products selected by the board. In4
selecting the providers, the board shall consider, among other things, the5
following:6
(1) The tax status of the product.7
(2) The portability of the products offered by the providers.8
(3) The type of products offered by the providers.9
(4) The relation of the costs and benefits as relates to the amount of the10
contributions to be made pursuant to the provisions of this Subpart.11
(5) The ability of the designated provider or providers to provide the12
rights and benefits under the products.13
(6) The nature and extent of the rights and benefits to be provided by the14
contracts for participating employees and their beneficiaries.15
(7) The suitability of the rights and benefits relative to the needs and16
interests of participants.17
(8) The ability of the provider to provide educational services and18
materials to participants.19
(9) The methods available for participants to interact with the provider20
company; the means by which participants may access account information,21
direct investment of contributions, make changes to their accounts, transfer22
monies between available investment vehicles, and transfer monies between23
provider companies; and any fees that apply to such activities.24
(10) An evaluation of specific investment products, taking into account25
each product's experience in meeting its investment return objectives net of all26
related fees, expenses, and charges, including but not limited to investment27
management fees, distribution and marketing fees, custody fees, record keeping28
fees, education fees, annuity expenses, and consulting fees.29 SB NO. 26
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(11) Organizational factors, including but not limited to the financial1
solvency of the provider, its organizational depth, and its experience in2
providing institutional and retail investment services.3
B. The board shall ensure that each participant is provided a quarterly4
statement that accounts for the contributions made on behalf of such5
participant; the interest and investment earnings thereon; and any fees,6
penalties, or other deductions that apply thereto. At a minimum, such7
statements shall:8
(1) Indicate the participant's investment options.9
(2) State the market value of the account at the close of the current10
quarter and previous quarter.11
(3) Show account gains and losses for the period and changes in account12
accumulation unit values for the period.13
(4) Itemize account contributions for the quarter.14
(5) Indicate any account changes due to adjustment of contribution15
levels, reallocation of contributions, balance transfers, or withdrawals.16
(6) Set forth any fees, charges, penalties, and deductions that apply to the17
account.18
(7) Indicate the amount of the account in which the participant is fully19
vested and the amount of the account in which the participant is not vested.20
(8) Indicate each investment product's performance relative to an21
appropriate market benchmark.22
§334. Contributions23
A.(1) Each participant shall make a ten percent employee contribution24
monthly. Each employer participating in a state retirement system shall25
contribute on behalf of each participant five and one-quarter percent of pay on26
a monthly basis.27
(2) The entirety of such contributions, less any monthly fee established28
by the board of trustees to cover the cost of administration and maintenance of29 SB NO. 26
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the defined contribution plan, shall be remitted by the system to the applicable1
designated provider or providers for crediting to the participant's account or2
accounts.3
B. Notwithstanding the provisions of Subsection A of this Section, the4
system shall not remit any funds or contributions to any provider or providers5
from an employer until the correct and total amount to be remitted to the6
system is received each month from the employer.7
§335. Vesting8
A participant shall be vested upon attainment of five years of service9
with an employer participating in a state retirement system. For purposes of10
this Subpart, "vesting" shall mean the acquisition of a property right to all11
employer contributions credited to a participant's account together with all12
interest attributable thereto. Upon commencement of participation in the13
defined contribution plan, a participant shall acquire an immediate property14
right to all employee contributions credited to his account together with interest15
attributable thereto.16
§336. Benefits17
A. The benefits payable to participants of a defined contribution plan18
established pursuant to this Subpart are not the obligations of the state of19
Louisiana or any state retirement system; rather, such benefits and other rights20
of the defined contribution plan are the sole liability and responsibility of the21
designated provider or providers to which contributions have been made.22
B.(1) Benefits shall be payable to defined contribution plan participants23
or their beneficiaries by the designated provider or providers and not by the24
respective state retirement system in accordance with the contract types25
provided by the providers selected and the contracts approved for use in the26
defined contribution plan by the board.27
(2) Subject to the provisions of the contract, retirement benefits shall be28
paid in the form of a lifetime income, unless the participant or beneficiary29 SB NO. 26
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requests a trustee-to-trustee single-sum cash rollover payment between1
qualified plans, or payment made directly to a conduit individual retirement2
account, but death benefits may be paid in the form of a single-sum cash3
payment paid directly to the beneficiary or estate, whichever is applicable.4
(3) The board of trustees may approve any of the following single-sum5
cash payments:6
(a) Direct transfers by and between companies.7
(b) Death benefits.8
(c) An initial benefit payable upon retirement, provided such benefit is9
approved by the contracting company. The initial benefit shall not exceed an10
amount equal to the participant's monthly benefit, payable as a single-life11
annuity times thirty-six.12
(4) Participants in the defined contribution plan shall not be entitled to13
any benefits to which members in the defined benefit plan are entitled,14
including, but not limited to, disability benefits, survivor benefits, participation15
in the Deferred Retirement Option Plan, and any cost-of-living adjustments or16
permanent benefit increases granted to retirees of the defined benefit plan;17
however, the services or products offered by a provider may provide for18
disability or survivor benefits.19
C. Participation in the defined contribution plan shall not preclude20
participation in the office of group benefits if the defined contribution plan21
participant or retiree would otherwise be entitled to participate in the office of22
group benefits in accordance with applicable laws and regulations.23
D. Defined contribution plan participants and providers shall be24
responsible for complying with all applicable provisions of the Internal Revenue25
Code, and if any violation of that code occurs as a result of the participant's26
participation in the defined contribution plan, it shall be the responsibility and27
liability of the participant and the provider and not the state retirement system.28
E. There shall be no liability on the part of and no cause of action of any29 SB NO. 26
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nature shall arise against a state retirement system, or its agents or employees,1
for any action taken in the performance of the duties under this Subpart.2
Section2. This Act shall become effective on July 1, 2012; if vetoed by the governor3
and subsequently approved by the legislature, this Act shall become effective on July 1,4
2012, or on the day following such approval by the legislature, whichever is later.5
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Laura Gail Sullivan.
DIGEST
Proposed law establishes a defined contribution plan in the Louisiana State Employees'
Retirement System (LASERS) and the Teachers' Retirement System of Louisiana (TRSL).
Proposed law provides for participation in the defined contribution plan of the system rather
than the defined benefit plan for certain persons hired on or after January 1, 2013.
Proposed law provides for defined contribution plan participation for:
(1)Employees covered by the Louisiana State Employees' Retirement System who are
not members of the Hazardous Duty Services Plan pursuant to R.S. 11:612.
(2)Employees covered by the Teachers' Retirement System of Louisiana who are
employed by an institution of post-secondary education.
Effective July 1, 2012.
(Adds R.S. 11:331-336)