2013 REGULAR SESSION
ACTUARIAL NOTE SB 13
Page 1 of 3
Senate Bill 13 SLS 13RS-70
Enrolled
Author: Senator Gerald Long
Date: June 3, 2013
LLA Note S B 13.03
Organizations Affected:
Louisiana State Police Retirement
System
EN NO IMPACT APV
This Note has been prepared by the Actuarial Services Department of the Office of
the Legislative Auditor. The attachment of this Note to SB 13 provides compliance
with the requirements of R.S. 24:52 1.
Bill Header: STATE POLICE RET FUND. Provides for powers and duties of the board of trustees. (6/30/13)
Cost Summary:
The estimated actuarial and fiscal impact of the proposed legislation is summarized below. Actuarial costs pertain to changes in the
actuarial present value of future benefit payments. A cost is denoted by “Increase” or a positive number. Savings are denoted by
“Decrease” or a negative number.
Actuarial Cost to Retirement Systems and OGB $0
Total Five Year Fiscal Cost
Expenditures $0
Revenues $0
Estimated Actuarial Impact:
The chart below shows the estimated change in the actuarial present value of future benefit payments, if any, attributable to the
proposed legislation. A cost is denoted by “Increase” or a positive number. Savings are denoted by “Decrease” or a negative number.
Present value costs associated with administration or other fiscal concerns are not included in these values.
Change in the
Actuarial Cost to: Actuarial Present Value
All Louisiana Public Retirement Systems $0
Other Post Retirement Benefits $0
Total $0
Estimated Fiscal Impact:
The chart below shows the estimated fiscal impact of the proposed legislation. This represents the effect on cash flows for
government entities including the retirement systems and the Office of Group Benefits. Fiscal costs include estimated administrative
costs and costs associated with other fiscal concerns. A fiscal cost is denoted by “Increase” or a positive number. Actuarial or fiscal
savings are denoted by “Decrease” or a negative number.
EXPENDITURES 2013-14 2014-15 2015-16 2016-17 2017-2018 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated 0 0 0 0 0 0
Stat Deds/Other 0 0 0 0 0 0
Federal Funds 0 0 0 0 0 0
Local Funds 0 0 0 0 0 0
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
REVENUES 2013-14 2014-15 2015-16 2016-17 2017-2018 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated 0 0 0 0 0 0
Stat Deds/Other 0 0 0 0 0 0
Federal Funds 0 0 0 0 0 0
Local Funds 0 0 0 0 0 0
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
2013 REGULAR SESSION
ACTUARIAL NOTE SB 13
Page 2 of 3
Bill Information:
Current Law
Current law requires the board of trustees for the Louisiana State Police retirement System (STPOL) to take all actions necessary
to comply with the provisions of the Internal Revenue Code. It does not contain any provisions giving specific a uthority to the
board of trustees to designate an actuary or any provisions identifying the responsibilities of an actuary for the retirement system.
Proposed Law
SB 13 describes the duties and powers of the board of trustees in designating an actuary, the duties and responsibilities of the
actuary, and the selection of actuarial assumptions to be used by the retirement system and its actuary. The language for the
proposed law parallels long standing language pertaining to other state and statewide systems which has generally been
interpreted in the following manner.
1. The board of trustees shall designate an actuary who is a technical advisor to the board on matters regarding the
operation of the retirement system.
2. The actuary shall make an actuarial investigation every five years into the mortality, service, and compensation
experience of members and beneficiaries of the retirement system and the discount rate. The first such investigation
shall be for FYE 2013.
3. The board shall adopt discount rate s, mortality tables, service and other tables as necessary based on the results of the
quinquennial investigation by the actuary.
4. The actuary shall conduct annual valuations for the retirement system based on the assumptions so adopted by the board
of trustees.
5. Actuarial equivalent benefits shall be determined on the basis of a 7.5% interest rate and the RP-2000 Sex Distinct
Mortality Table.
6. Any new tables and interest assumptions adopted for actuarial equivalence purposes shall apply only to persons who are
active members on the date of adoption.
7. A member’s accrued benefit will not be reduced as a result of any change in assumptions used to calculate actuarial
equivalence.
8. The board may change the basis for calculating actuarial equivalence by formally adopting such changes as a rule under
the Administrative Procedures Act.
Implications of the Proposed Changes
Legal counsel for STPOL recommends the enactment of SB 13, or similar instrument, to maintain the retirement system as a tax
qualified retirement plan under the Internal Revenue Code.
Cost Analysis:
Analysis of Actuarial Costs
Retirement Systems
The actuarial present value of future benefit requirements will increase because of the provision guaranteeing that a
member’s accrued benefit will not be reduced. However, the increase is negligible.
Other Post Retirement Benefits
There are no actuarial costs associated with SB 13 for post-employment benefits other than pensions.
Analysis of Fiscal Costs
There are no fiscal costs associated with SB 13.
Actuarial Credentials:
Paul T. Richmond is the Manager of Actuarial Services for the Louisiana Legislative Auditor. He is an Enrolled Actuary, a
member of the American Academy of Actuaries, a member of the Society of Actuaries and has met the Qualification Standards of
the American Academy of Actuaries necessary to render the actuarial opinion contained herein.
2013 REGULAR SESSION
ACTUARIAL NOTE SB 13
Page 3 of 3
Dual Referral:
Senate House
13.5.1 ≥ $100,000 Annual Fiscal Cost 6.8(F)(1) ≥ $500,000 Annual Fiscal Cost
13.5.2 ≥ $500,000 Annual Tax or Fee Change 6.8(G) ≥ $500,000 Annual Tax or Fee Change