2015 REGULAR SESSION
ACTUARIAL NOTE H B 45
Page 1 of 3
House Bill 45 HLS 15RS-432
Original
Author: Representative J. Kevin
Pearson
Date: April 22, 2015
LLA Note H B 45.01
Organizations Affected:
Louisiana State Employees’
Retirement System
OR INCREASE APV
This Note has been prepared by the Actuarial Services Department of the Office of
the Legislative Auditor. The attachment of this Note to H B 45 provides
compliance with the requirements of R.S. 24:52 1
Bill Header: Provides relative to implementation of new age sixty- two retirement eligibility for new hires in state systems
Cost Summary:
The estimated actuarial and fiscal impact of the proposed legislative 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 Increase
Total Five Year Fiscal Cost
Expenditures Increase
Revenues Increase
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 Increase
Other Post Retirement Benefits $0
Total Increase
Estimated Fiscal Impact:
The chart below shows the estimated fiscal impact of the proposed legislation. This represents the effect on cash flows for the
retirement systems and other government entities. 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 2015-16 2016-17 2017-18 2018-19 2019-20 5 Year Total
State General Fund Increase Increase Increase Increase Increase Increase
Agy Self Generated Increase Increase Increase Increase Increase Increase
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 Increase Increase Increase Increase Increase Increase
REVENUES 2015-16 2016-17 2017-18 2018-19 2019-20 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated Increase Increase Increase Increase Increase Increase
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 Increase Increase Increase Increase Increase Increase
2015 REGULAR SESSION
ACTUARIAL NOTE H B 45
Page 2 of 3
Bill Information:
Current Law
Under current law, membership in the Louisiana State Employees’ Retirement System (LASERS) is optional for a state employee
age 60 and older at the time of employment.
Proposed Law
Under HB 45, membership i n LASERS will be optional for a state employee age 62 and older at the time of employment.
Implications of the Proposed Changes
HB 45 only affects new state employees who are at least age 60 but less than age 62 at the time of employment. These employees
will be required to become members of LASERS. They will not have the right to opt out of participation.
Cost Analysis:
Analysis of Actuarial Costs
HB 45 will eliminate the right of a new state employee, age 60 to age 62 at the time of employment, to opt out of LASERS. HB 45
will force such a member to join the system . This is an improvement in benefits payable by the retirement system and there is an
increase in actuarial costs associated with this mandate to join the system.
Retirement Systems
HB 45 has the following effect on actuarial costs.
1. The present value of future benefits will increase.
2. The number of new participants entering LASERS in the future will increase.
3. The total normal cost will increase because there will be more members earning benefits.
4. The employer normal cost rate is likely to increase because normal costs for older individuals (these between age 60
and 62) are greater than normal costs for system members prior to the enactment of HB 45.
5. The UAL for LASERS will not change.
6. The employer amortization contribution rate will decrease because the UAL will be spread over a larger payroll.
However, employer contributions to the UAL will not change.
Other Post-Employment Benefits
HB 45 is unlikely to create additional costs relative to post- retirement benefits other than pensions. Individuals affected by
HB 45 are not likely to have enough participation in the OGB health plan to receive any premium share from the state.
Analysis of Fiscal Costs
Under HB 45, the revenue to LASERS is more than the benefit accrual associated with new entrants. HB 45 will have the
following effect on fiscal costs:
Expenditures:
1. Expenditures from General Fund will increase during the 5 -year fiscal measurement period because the total normal cost
for LASERS is likely to be larger with HB 45 than without.
2. Expenditures from the LASERS (Agy Self-Generated) will increase to pay benefits to members affected by HB 45 who
terminate employment during the five year fiscal measurement period.
Revenues:
• LASERS revenues (Agy Self-Generated) will increase during the 5 -year measurement period because the dollar amount
of required employee and employer contribution will increase.
It is likely that fiscal costs will increase more than $100,000 during the three years immediately following the 2015 session.
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 adopted by PRSAC.
Actuarial Caveat
There is nothing in H B 45 that will compromise the signing actuary’s ability to present an unbiased statement of actuarial opinion.
2015 REGULAR SESSION
ACTUARIAL NOTE H B 45
Page 3 of 3
Actuarial Credentials:
Paul T. Richmond is the actuary 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.
Dual Referral:
Senate House
x 13.5.1: Annual Fiscal Cost ≥ $100,000 x 6.8(F)(1): Annual Fiscal Cost ≥ $100,000
13.5.2: Annual Tax or Fee Change ≥ $500,000 6.8(F)(2): Annual Revenue Reduction ≥ $100,000
6.8(G): Annual Tax or Fee Change ≥ $500,000