Louisiana Senate Bill SB55

Louisiana 2012 Regular Session

• Introduced: 3/12/12
• Refer: 3/12/12

Caption

Changes the system's actuarial valuation method to entry age normal. (7/1/12) (OR INCREASE FC GF EX)

Impact

The adoption of SB55 is expected to have significant impacts on state laws governing retirement systems, specifically those related to employer contributions. The bill stipulates that the LASERS employer contribution rate will increase by 0.7% to account for the shift to this new actuarial method. This increment is designed to help reduce the unfunded accrued liability (UAL) within the system, which has been a concern for policymakers and stakeholders within the state's financial landscape. By providing a framework for more consistent and predictable funding, the bill could lead to improved perceptions of the solvency of the state’s retirement fund.

Summary

Senate Bill 55 seeks to amend the Louisiana State Employees' Retirement System (LASERS) by changing the actuarial valuation method from projected unit credit to entry age normal. This change is aimed at ensuring the long-term financial stability of the retirement system by providing a more accurate assessment of liabilities and required contributions. By adopting the entry age normal method, the bill proposes a more stable contribution mechanism which aligns the costs with the aging process of employees, thus reflecting a more systematic approach to pension funding.

Sentiment

General sentiment surrounding SB55 appears to be favorable among legislative members who prioritize fiscal responsibility and the sustainability of retirement systems. Proponents argue that the transition to entry age normal will make LASERS more resilient to fluctuations in investment returns and demographic changes. However, there are concerns from critics who worry about the implications of increased contributions for state employers, which could affect budget allocations for other public services. The debate centers around balancing improved funding stability against the immediate financial impact on state resources.

Contention

Notable points of contention include the potential for increased employer contributions, which some view as a necessary step towards accountability in pension funding. Others argue that this could strain the budgets of state agencies. Additionally, there may be discussions regarding the long-term impacts on public sector employees and their benefits as the system transitions to the new actuarial method. The effectiveness of the entry age normal method versus the projected unit credit method is also a subject of scrutiny, as stakeholders evaluate which model better serves the best interests of state employees and the financial health of LASERS.