Provides for application of excess investment earnings of the state retirement systems. (2/3 - CA10s29) (6/30/15) (REF INCREASE APV)
The adjustments proposed in SB16 could lead to increased actuarial costs, as lowering the funding threshold may facilitate more regular granting of PBIs when a system attains an 80% funding level instead of the previous 85%. This change is likely to result in increased employer contribution requirements when PBIs are granted. However, the bill specifies that it does not introduce direct costs or savings simply from the restructuring of content within existing law, and it signals that employer contributions will primarily remain unaffected during the 5-year fiscal measurement period.
Senate Bill 16 (SB16) aims to modify and clarify the existing framework governing Louisiana's state retirement systems, which includes LASERS, TRSL, LSERS, and STPOL. The bill is designed to ease administration of retirement benefits by rearranging current laws and clarifying several actuarial concepts that were inadvertently omitted from prior legislation. Specifically, SB16 lowers the funding threshold for state retirement systems from 85% to 80%, which may enable more frequent permission for granting permanent benefit increases (PBIs) to retirees. Additionally, the bill clarifies the procedure for the calculation of funded ratios and resumption of the reallocation of gains in the retirement systems.
Discussions surrounding SB16 reflect a general sentiment that focuses on enhancing the efficiency and clarity of the statutory regime governing retirement systems while balancing the financial implications involved. Advocates for the bill emphasize its potential to improve benefits for retirees and streamline calculations associated with these benefits. Critics, however, may view these changes as potentially risking long-term funding stability for retirement systems by allowing more frequent benefit increases than that allowed under the previous 85% threshold.
Notable points of contention surrounding SB16 include concerns over the long-term fiscal sustainability of lowering the threshold for PBIs. While proponents argue that the bill ensures retirees can receive benefits more regularly, opponents express worries that this approach could lead to increased financial liability for the retirement systems, especially if demographic changes impact funding levels. Furthermore, the bill’s restructuring of normal cost rates for specific sub plans into a single cost rate has raised questions about the appropriateness of consolidating different plans under one fiscal framework.