Provides a sixty-month final average compensation period for members of state and statewide retirement systems. (7/1/13) (OR -$107,000,000 FC GF LF EX)
The implications of SB 7 are substantial, with estimates indicating a reduction in the unfunded accrued liability of approximately $571.3 million. Furthermore, employer contribution requirements will see a decrease of around $107 million over a five-year span. The legislation's provisions will not apply to members who retire before December 31, 2013, thereby allowing existing members to retain benefits under prior regulations while affecting future retirees significantly. Overall, the bill aims to alleviate fiscal pressures on Louisiana's public retirement systems.
Senate Bill 7 primarily modifies the computation period for final average compensation used in retirement benefits for members of state and statewide retirement systems, changing it to a sixty-month period. This bill aims to standardize the method of calculating retirement benefits, which is a significant change from the previously established three-year period for certain members. The move towards a longer computation period is intended to reduce the financial burden on the state's retirement systems and ensure more predictable budgeting for retirement payouts.
The sentiment around the bill is mixed, reflecting a divide among stakeholders. Proponents, including various legislators, perceive SB 7 as essential for fiscal sustainability of retirement systems, ensuring their long-term viability. Conversely, critics warn that adjustments to the compensation computation could result in reduced benefits for future retirees, raising concerns about maintaining fair retiree compensation. This tension reflects broader debates on how best to manage state finances while honoring commitments to public employees.
Notable points of contention regarding SB 7 center on its potential impact on future retirees' benefits and the perceived fairness of extending the average compensation period. Overall, while supporters argue that the bill is a necessary step to ensure the financial health of retirement systems, opponents view it as a risk to the retirement security of state employees. There are also concerns that the legal implications could arise, as some stakeholders may challenge the bill's constitutionality based on the perceived reduction of earned benefits.