2014 REGULAR SESSION
ACTUARIAL NOTE HB 39
Page 1 of 3
House Bill 39 HLS 14RS-378
Engrossed
Author: Representative Pearson
Date: April 16, 2014
LLA Note HB 39.02
Organizations Affected:
Louisiana Assessors’ Retirement
Fund
EG NO IMPACT APV
The Note was prepared by the Actuarial Services Department of the Office of the
Legislative Auditor. The attachment of the Note to HB 39 provides compliance
with the requirements of R.S. 24:521.
Bill Header: RETIREMENT/ASSESSORS: Provides relative to the Back -Deferred Retirement Option Plan (Back -DROP) in the
Louisiana Assessors’ Retirement Fund
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/(Savings) 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.
Increase (Decrease) in
Actuarial Cost (Savings) to: The 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 administrati ve
costs and costs associated with other fiscal concerns. A fiscal cost is denoted by “Increase” or a positive number. F iscal savings are
denoted by “Decrease” or a negative number.
EXPENDITURES 2014-15 2015-16 2016-17 2017-2018 2018-2019 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 2014-15 2015-16 2016-17 2017-2018 2018-2019 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
2014 REGULAR SESSION
ACTUARIAL NOTE HB 39
Page 2 of 3
Bill Information:
Current Law
Current law provides for the Back -Deferred Retirement Option Program (Back-DROP) for the members of Louisiana Assessors’
Retirement Fund. An e ligible participant in Back-DROP receives his retirement benefit based on age, service, final average
compensation, and plan provisions established retroactively on the first date of his Back-DROP period. In addition to monthly
benefits, such a member receives a lump sum payment for the period he participated in Back-DROP.
Proposed Law
HB 39 authorizes the board of trustees to contract with a third party provider to provide self -directed investment accounts for
lump sum payments made to participants of Back- DROP. A Back-DROP member electing to participate in the self-directed
accounts will waive the following:
1. That benefits payable from the self-directed account are not the obligations of the state or the fund.
2. That the participant and the selected third party provider bear all the liability and responsibility for returns and other
rights under the account.
3. That the participant waives his constitutional protections against diminished or impaired benefits.
4. That the participant and the third party provider bear all responsibility for complying with applicable IRS provisions and
regulations.
5. That the state and the fund and all agents of the state and the fund are not liable for choices the participant makes as to
his investments.
HB 39 will also permit a member to roll eligible distributions to another qualified retirement plan.
Implications of the Proposed Changes
HB 39 authorizes the L ouisiana Assessors’ Retirement Fund to contract with a third party provider to provide self-directed
investment accounts for members of the system who retire under the Back-DROP program.
Cost Analysis:
Analysis of Actuarial Costs
Retirement Systems
Therefore there are no actuarial costs associated with HB 39.
Other Post-Employment Benefits
There are no actuarial costs associated with HB 39 for post-employment benefits other than pensions.
Analysis of Fiscal Costs
There are no fiscal costs associated with HB 39.
Actuarial Data, Methods and Assumptions
This actuarial note was prepared using actuarial data, methods, and assumptions as disclosed in the most recent actuarial valuation
report approved by PRSAC. These assumptions and methods are in compliance with actuarial standards of practice. This data,
methods and assumptions are being used to provide consistency with the actuary for the retirement system who may also be
providing testimony to the Senate and House retirement committees.
Actuarial Caveat
There is nothing in HB 39 that will compromise the signing actuary’s ability to present an unbiased statement of actuarial opinion.
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.
2014 REGULAR SESSION
ACTUARIAL NOTE HB 39
Page 3 of 3
Dual Referral:
Senate House
13.5.1: Annual Fiscal Cost ≥ $100,000 6.8(F)(1): Annual State Fiscal Cost ≥ $100,000
13.5.2: Annual Tax or Fee Change ≥ $500,000 6.8(F)(2): Annual State Revenue Reduction ≥ $500,000
6.8(G): Annual Tax or Fee Change ≥ $500,000