Allows an optional retirement plan participant to transfer to the regular plan. (2/3 - CA10s29(F)) (6/15/14) (14RS_SB5_ORG)
The bill is expected to have substantial implications for state laws governing retirement systems. It introduces a set of actuarial cost considerations, primarily due to the likelihood that transferring members will be those who anticipate higher retirement benefits from the TRSL system. As a result, there could be an increased unfunded liability for TRSL related to future benefit payments. This legislation alters the framework of retirement benefit eligibility, allowing for greater flexibility in how retirement assets can be managed by employees of public higher education institutions.
Senate Bill 5 (SB5) proposes a significant change to the retirement options available for members of the Optional Retirement Plan (ORP) in Louisiana's higher education sector. Specifically, it allows members who opted into ORP before December 31, 2013, to make a one-time irrevocable election to switch to the Teachers’ Retirement System of Louisiana's (TRSL) defined benefit plan. This transition entails transferring the entire ORP account balance to the TRSL, along with the possibility of purchasing additional service credits to reflect the member's entitlements under the TRSL plan.
There appears to be a mixed sentiment surrounding SB5. Supporters argue that it provides former ORP participants with a valuable opportunity to access potentially better retirement benefits through the TRSL plan. Conversely, critics highlight concerns regarding the fiscal impacts on the retirement system, indicating fears that such transfers could lead to significant increases in the pension liabilities for the state due to anti-selection tendencies, where healthier members opt to transfer for better benefits.
Debates surrounding SB5 focus on the potential financial repercussions for the retirement system, including the challenges in accurately projecting actuarial costs. While some legislators advocate for the bill as a progressive step towards enhancing employee retirement options, others caution against its long-term financial sustainability and the risk of increasing state contributions to the pension system. The contention also revolves around whether this measure adequately addresses the needs of employees or simply shifts risk and costs to the retirement system without a clear path for resolving increased liabilities.