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Regular Session, 2012
SENATE BILL NO. 53
BY SENATOR GUILLORY
RETIREMENT BENEFITS. Provides for a cash balance plan for certain state employees.
(6/30/12)
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) and4
(E), and to enact R.S. 11:62(4.1), (5.1), and (11.1), 102(C)(1)(m), 542(C)(4)(d)(iii)5
and (e)(iii), 883.1(C)(4)(d)(iii) and (e)(iii), 1145.1(C)(4)(a)(iii) and (b)(iii), and6
Chapter 7 of Subtitle II of Title 11 of the Louisiana Revised Statutes of 1950, to be7
comprised of R.S. 11:1399-1399.5, relative to state retirement systems; to create a8
cash balance plan in certain state systems; to provide for contributions, credits,9
eligibility, and benefits; to provide for an effective date; and to provide for related10
matters.11
Notice of intention to introduce this Act has been published.12
Be it enacted by the Legislature of Louisiana:13
Section 1. R.S. 11:62(4)(introductory paragraph), (5)(introductory paragraph), and14
(11)(introductory paragraph), 102(B)(1) and (3)(a) and (d)(v), (vi), and (vii), 542(A)(2)(a),15
883.1(A)(2)(a), and 1145.1(A)(1)(introductory paragraph) and (a) and (E) are hereby16
amended and reenacted and R.S. 11:62(4.1), (5.1), and (11.1), 102(C)(1)(m),17 SB NO. 53
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542(C)(4)(d)(iii) and (e)(iii), 883.1(C)(4)(d)(iii) and (e)(iii), 1145.1(C)(4)(a)(iii) and (b)(iii),1
and Chapter 7 of Subtitle II of Title 11 of the Louisiana Revised Statutes of 1950, to be2
comprised of R.S. 11:1399 - 1399.5, are hereby enacted to read as follows:3
§62. Employee contribution rates established4
Employee contributions to state and statewide public retirement systems shall5
be paid at the following rates, except as otherwise provided by law:6
* * *7
(4) Louisiana School Employees' Retirement System members in Tier 1:8
* * *9
(4.1) Louisiana School Employees' Retirement System members in the10
cash balance plan - 8%.11
* * *12
(5) Louisiana State Employees' Retirement System members in Tier 1:13
* * *14
(5.1) Louisiana State Employees' Retirement System members in the15
cash balance plan - 8%.16
* * *17
(11) Teachers' Retirement System of Louisiana members in Tier 1:18
* * *19
(11.1) Teachers' Retirement System of Louisiana members in the cash20
balance plan - 8%.21
* * *22
§102. Employer contributions; determination; state systems23
* * *24
B.(1) Except as provided in Subsection C of this Section for the Louisiana25
State Employees' Retirement System and except as provided in R.S. 11:102.1 and26
102.2 and in Paragraph (5) of this Subsection, for each fiscal year, commencing with27
Fiscal Year 1989-1990, for each of the public retirement systems referenced in28
Subsection A of this Section, the legislature shall set the required employer29 SB NO. 53
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contribution rate equal to the actuarially required employer contribution, as1
determined under Paragraph (3) of this Subsection, divided by the total projected2
payroll of all active members including cash balance plan members of each3
particular system for the fiscal year. Each entity funding a portion of a member's4
salary shall also fund the employer's contribution on that portion of the member's5
salary at the employer contribution rate specified in this Subsection.6
* * *7
(3) With respect to each state public retirement system, the actuarially8
required employer contribution for each fiscal year, commencing with Fiscal Year9
1989-1990, shall be that dollar amount equal to the sum of:10
(a) The employer's normal cost for that fiscal year, computed as of the first11
of the fiscal year using the system's actuarial funding method as specified in R.S.12
11:22 and taking into account the value of future accumulated employee13
contributions and interest thereon, such employer's normal cost rate multiplied by the14
total projected payroll for all active members including cash balance plan15
members to the middle of that fiscal year. For the Louisiana State Employees'16
Retirement System, effective for the June 30, 2010, system valuation and beginning17
with Fiscal Year 2011-2012, the normal cost shall be determined in accordance with18
Subsection C of this Section.19
* * *20
(d) That fiscal year's payment, computed as of the first of that fiscal year and21
projected to the middle of that fiscal year at the actuarially assumed interest rate,22
necessary to amortize changes in actuarial liability due to:23
* * *24
(v) Effective July 1, 2004, and beginning with Fiscal Year 1998-1999, the25
amortization period for the changes, gains, or losses of the Louisiana State26
Employees' Retirement System provided in Items (i) through (iv) of this27
Subparagraph shall be thirty years, or in accordance with standards promulgated by28
the Governmental Accounting Standards Board, from the year in which the change,29 SB NO. 53
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gain, or loss occurred. The outstanding balances of amortization bases established1
pursuant to Items (i) through (iv) of this Subparagraph before Fiscal Year2
1998-1999, shall be amortized as a level dollar amount from July 1, 2004, through3
June 30, 2029. Beginning with Fiscal Year 2003-2004, and for each fiscal year4
thereafter, the outstanding balances of amortization bases established pursuant to5
Items (i) through (iv) of this Subparagraph and for any changes, gains, or losses6
attributable to the cash balance plan shall be amortized as a level dollar amount.7
For the Louisiana State Employees' Retirement System, effective for the June 30,8
2010, system valuation and beginning with Fiscal Year 2011-2012, amortization9
payments for changes in actuarial liability shall be determined in accordance with10
Subsection C of this Section.11
(vi) Effective July 1, 2004, and beginning with Fiscal Year 2000-2001, the12
amortization period for the changes, gains, or losses of the Louisiana School13
Employees' Retirement System provided in Items (i) through (iv) of this14
Subparagraph and for any changes, gains, or losses attributable to the cash15
balance plan shall be thirty years, or in accordance with standards promulgated by16
the Governmental Accounting Standards Board, from the year in which the change,17
gain, or loss occurred. The outstanding balances of amortization bases established18
pursuant to Items (i) through (iv) of this Subparagraph before Fiscal Year 2000-19
2001, shall be amortized as a level dollar amount from July 1, 2004, through June 30,20
2029. Beginning with Fiscal Year 2003-2004, and for each fiscal year thereafter, the21
outstanding balances of amortization bases established pursuant to Items (i) through22
(iv) of this Subparagraph shall be amortized as a level dollar amount.23
(vii) Effective July 1, 2004, and beginning with Fiscal Year 2000-2001, the24
amortization period for the changes, gains, or losses of the Teachers' Retirement25
System of Louisiana provided in Items (i) through (iv) of this Subparagraph and for26
any changes, gains, or losses attributable to the cash balance plan shall be thirty27
years, or in accordance with standards promulgated by the Governmental Accounting28
Standards Board, from the year in which the change, gain, or loss occurred. The29 SB NO. 53
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outstanding balances of amortization bases established pursuant to Items (i) through1
(iv) of this Subparagraph before Fiscal Year 2000-2001, shall be amortized as a level2
dollar amount from July 1, 2004, through June 30, 2029. Beginning with Fiscal Year3
2003-2004, and for each fiscal year thereafter, the outstanding balances of4
amortization bases established pursuant to Items (i) through (iv) of this Subparagraph5
shall be amortized as a level dollar amount.6
* * *7
C.(1) This Subsection shall be applicable to the Louisiana State Employees'8
Retirement System effective for the June 30, 2010, system valuation and beginning9
Fiscal Year 2011-2012. For purposes of this Subsection, "plan" or "plans" shall10
mean a subgroup within the system characterized by the following employee11
classifications:12
* * *13
(m) Members in the cash balance plan.14
* * *15
§542. Experience account16
A.(1) * * *17
(2) The experience account shall be credited as follows:18
(a) To the extent permitted by Paragraph (3) of this Subsection and after19
allocation to the consolidated amortization bases as provided in R.S. 11:102.1, an20
amount not to exceed fifty percent of the remaining balance of the prior year's net21
investment experience gain attributable to Tier 1 assets as determined by the22
system's actuary.23
* * *24
C.(1)25
* * *26
(4)(a)27
* * *28
(d) Except as provided in Subparagraph (c) of this Paragraph, in order to be29 SB NO. 53
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eligible for any permanent benefit increase payable on or after July 1, 2009, there1
shall be the funds available in the experience account to pay for such an increase, and2
a retiree:3
* * *4
(iii) Shall be a member of Tier 1.5
(e) Except as provided in Subparagraph (c) of this Paragraph, a nonretiree6
beneficiary shall be eligible for the permanent benefit increase payable on or after7
July 1, 2009:8
* * *9
(iii) If the benefits are based on Tier 1 service.10
* * *11
§883.1. Experience account12
A.(1) * * *13
(2) The experience account shall be credited as follows:14
(a) To the extent permitted by Paragraph (3) of this Subsection and after15
allocation to the consolidated amortization bases as provided in R.S. 11:102.2, an16
amount not to exceed fifty percent of the remaining balance of the prior year's net17
investment experience gain attributable to Tier 1 assets as determined by the18
system's actuary.19
* * *20
C.(1)21
* * *22
(4)(a)23
* * *24
(d) Except as provided in Subparagraph (c) of this Paragraph, in order to be25
eligible for any permanent benefit increase payable on or after July 1, 2009, there26
shall be the funds available in the experience account to pay for such an increase, and27
a retiree:28
* * *29 SB NO. 53
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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
§1145.1. Employee Experience Account account8
A.(1) The Employee Experience Account experience account shall be9
credited as follows:10
(a) To the extent permitted by Paragraph (2) of this Subsection, an amount11
not to exceed fifty percent of the prior year's net investment experience gain12
attributable to Tier 1 assets as determined by the system's actuary.13
* * *14
C.(1) * * *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 RETIREMENT SYSTEMS1
§1399. 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 29, 2012, including8
any special plans, shall be known as "Tier 1".9
§1399.1. Cash balance plan membership10
A. Mandatory membership. The following employees whose first11
employment making them eligible for membership in one of the state systems12
occurred on or after January 1, 2013, shall be members of the cash balance plan13
of their respective systems:14
(1) Employees covered by the Louisiana State Employees' Retirement15
System who are not members of the Hazardous Duty Services Plan pursuant to16
R.S. 11:612.17
(2) Employees covered by the Teachers' Retirement System of Louisiana18
who are employed by an institution of post-secondary education and who do not19
become members of the optional retirement plan.20
B. Optional membership. (1) Except as provided in Paragraph (2) of21
this Subsection, any employee who is a member of Tier 1 of his retirement22
system may at any time make an irrevocable election to join the cash balance23
plan of the retirement system on a prospective basis.24
(2) No member of the Hazardous Duty Services Plan and no person who25
would have been a member of such plan had his first employment occurred26
after December 31, 2010, shall be permitted to elect to join the cash balance27
plan.28
§1399.2. Cash balance plan account accumulation29 SB NO. 53
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A. Contributions. (1) Each employee shall contribute to the retirement1
system the amount specified in R.S. 11:62.2
(2) Employer contributions to each retirement system shall be as3
provided in R.S. 11:102.4
B. Credits. The cash balance plan member's account shall be credited5
with an amount equal to twelve percent of pay monthly. The credits shall6
include all employee contributions.7
C. Interest. (1) For the duration of service covered by the cash balance8
plan, interest shall be payable on the balance in the member's account on the9
last day of the fiscal year. The member's account shall be credited with interest10
at an annual rate equal to the system's actuarial rate of return on investments,11
after smoothing, for that fiscal year less one hundred basis points.12
(2) No interest shall be credited after the member separates from service13
covered by the cash balance plan of his retirement system.14
(3) In no case shall the balance in the employee's account be debited for15
investment losses.16
D. Withdrawal from the cash balance plan. A cash balance plan17
member who separates from employment covered by his retirement system may18
withdraw from the cash balance plan.19
(1) Upon application for withdrawal, an employee who has been a cash20
balance plan member for less than five years shall receive a refund of employee21
contributions without interest. The system shall retain all interest and any22
employer contributions.23
(2) Upon application for withdrawal, an employee who has been a cash24
balance plan member for five years or longer shall receive a lump-sum payment25
of his account balance. The employee may opt to leave his account balance with26
the system and draw an annuity pursuant to R.S. 11:1399.3 when he attains age27
sixty.28
(3)(i) A cash balance plan member shall not be eligible to utilize the29 SB NO. 53
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years of his membership in the cash balance plan for purposes of reciprocal1
recognition of credited service pursuant to R.S. 11:142.2
(ii) A cash balance plan member who elects to withdraw from the cash3
balance plan after becoming a member of another Louisiana public retirement4
system may execute the withdrawal provided in this Subsection pursuant to the5
provisions of R.S. 11:143 to transfer or reverse transfer his years of6
membership in the cash balance plan as service credit to another retirement7
system. However, the provisions of R.S. 11:143(C) shall not apply to such8
transaction; instead, the system from which the member is withdrawing shall9
transfer to the receiving system only the amount the member is entitled to10
receive pursuant to Paragraph (2) or (3) of this Subsection. The transfer shall11
be executed on an actuarial basis. If the funds transferred from the cash12
balance plan are insufficient to cover the actuarial liabilities created, the13
member shall pay the difference or receive actuarially reduced service credit,14
as provided in R.S. 11:143.15
(4) If a cash balance plan member dies without having withdrawn from16
the cash balance plan pursuant to this Subsection or annuitized his benefit17
pursuant to R.S. 11:1399.3, or if a member becomes disabled, the system shall18
pay to his designated beneficiary or to his estate a lump-sum payment of his19
account balance.20
§1399.3 Retirement eligibility; benefit calculation21
A. Eligibility for retirement. A cash balance plan member is eligible to22
draw an annuity with five years of membership in the cash balance plan at age23
sixty. The annuity payment amount shall be calculated as provided in24
Subsection B of this Section.25
B. Annuitization of retirement benefit. (1) Upon application for26
retirement any member may elect to receive an annuity in a retirement27
allowance payable throughout his life, or he may elect at that time to receive the28
actuarial equivalent of his retirement allowance in a reduced retirement29 SB NO. 53
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allowance payable throughout life, pursuant to any retirement option provided1
for Tier 1 members of his system.2
(2) No member of the cash balance plan shall be eligible to participate3
in any deferred retirement option plan or program or any similar retirement4
option that requires continued employment for participation, nor shall such a5
member be eligible to participate in any back-deferred retirement option plan6
or program. However, a cash balance plan member may participate in any7
initial benefit option, initial lump sum benefit option, or any similar retirement8
option designed to provide a reduced annuity in exchange for a lump-sum9
payment which is selected upon separation from service.10
§1399.4. Reemployment11
If, after withdrawing from the cash balance plan upon separation from12
service or after annuitizing his benefit, a cash balance plan member becomes13
reemployed in a position covered by the cash balance plan, the person's14
accumulation in the cash balance plan pursuant to R.S. 11:1399.2 shall begin15
again. However, the reemployment shall not affect the receipt of the lump sum16
or annuitized payments from the first cash balance account.17
§1399.5. Application18
The provisions of the applicable Tier 1 system or plan shall apply to the19
cash balance plan for any matter on which this Chapter is silent. In case of any20
conflict between the provisions of Tier 1 and the cash balance plan, the cash21
balance plan shall prevail.22
Section 2. As soon as practicable after the effective date of this Act, the Public23
Retirement Systems' Actuarial Committee shall meet to adopt a revised valuation for the24
system, prepared as provided in R.S. 11:102. This valuation shall include a revised25
employer contribution rate for each system or plan within the system to be utilized in the26
fiscal year which begins on July 1, 2012.27
Section 3. This Act shall become effective on June 30, 2012; if vetoed by the28
governor and subsequently approved by the legislature, this Act shall become effective on29 SB NO. 53
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June 30, 2012, or on the day following such approval by the legislature, whichever is later.1
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Laura Gail Sullivan.
DIGEST
Proposed law provides for a cash balance retirement plan for certain members of the
Louisiana State Employees' Retirement System (LASERS), the Teachers' Retirement System
of Louisiana (Teachers'), and the Louisiana School Employees' Retirement System (LSERS).
Effective June 30, 2012.
(Amends R.S. 11:62(4)(intro. para.), (5)(intro. para.), and (11)(intro. para.), 102(B)(1) and
(3)(a) and (d)(v), (vi), and (vii), 542(A)(2)(a), 883.1(A)(2)(a), and 1145.1(A)(1)(intro. para.)
and (a) and (E); adds R.S. 11:62(4.1), (5.1), and (11.1), 102(C)(1)(m), 542(C)(4)(d)(iii) and
(e)(iii), 883.1(C)(4)(d)(iii) and (e)(iii), 1145.1(C)(4)(a)(iii) and (b)(iii), R.S. 11:1399-
1399.5)