HLS 16RS-412 ENGROSSED
2016 Regular Session
HOUSE BILL NO. 58
BY REPRESENTATIVE LEGER
RETIREMENT/LOCAL: Provides relative to the Deferred Retirement Option Plan in the
Firefighters' Pension and Relief Fund in the city of New Orleans
1 AN ACT
2To amend and reenact R.S. 11:3385.1(D) and (H)(2), relative to the Deferred Retirement
3 Option Plan in the Firefighters' Pension and Relief Fund in the city of New Orleans;
4 to provide relative to benefit options for members electing to participate in such plan;
5 to provide with respect to account funds and interest thereon; to provide with respect
6 to administrative fees charged to such accounts; and to provide for related matters.
7 Notice of intention to introduce this Act has been published
8 as provided by Article III, Section 13 and Article X, Section
9 29(C) of the Constitution of Louisiana.
10Be it enacted by the Legislature of Louisiana:
11 Section 1. R.S. 11:3385.1(D) and (H)(2) are hereby amended and reenacted to read
12as follows:
13 ยง3385.1. Deferred Retirement Option Plan
14 * * *
15 D. A member may participate in the Deferred Retirement Option Plan only
16 once. A member electing to participate in the Deferred Retirement Option Plan shall
17 not be eligible to receive an initial lump sum benefit provided pursuant to R.S.
18 11:3385.2.
19 * * *
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HB NO. 58
1 H.
2 * * *
3 (2)(a) Beginning January 1, 2015, and continuing each year thereafter, upon
4 expiration of the participation period or termination of employment, if earlier, and
5 each year until the member's DROP account is distributed in its entirety, interest
6 shall be allocated annually to all member DROP accounts based on a five-year
7 rolling average of the composite rate of return of the pension fund as determined by
8 the system actuary, less an administrative fee as determined by the board of trustees.
9 Prior to January 1, 2015, interest shall be allocated each year based on the one-year
10 composite rate of return of the pension fund, less an administration fee determined
11 by the board of trustees, not to exceed two percent. The balance of the a member's
12 DROP account shall not be diminished or impaired. ,except as otherwise provided
13 in Subparagraph (c) of this Paragraph.
14 (b) Notwithstanding the provisions of Subparagraph (a) of this Paragraph,
15 upon expiration of the participation period or termination of employment if earlier,
16 a member's DROP account shall be placed in liquid asset money market investments
17 at the discretion of the board of trustees. The DROP account shall be credited with
18 interest at the actual rate of return earned on such money market investments.
19 (c) Notwithstanding the provisions of Subparagraph (a) or (b) of this
20 Paragraph, if a member participating in the Deferred Retirement Option Plan on or
21 after January 1, 2016, upon expiration of the participation period or termination of
22 employment if earlier, makes an irrevocable written election to waive the guarantees
23 contained in Subparagraphs (a) and (b) of this Paragraph and to authorize the fund
24 to debit his DROP account if the fund's investment portfolio experiences a negative
25 earning rate and to permanently reduce the value of his DROP account if the fund
26 assets are devalued by a negative earning rate, that member's DROP account may
27 earn interest at a rate based on a five-year rolling average of the composite rate of
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HB NO. 58
1 return of the fund's investment portfolio as determined by the actuary, less a two
2 percent administrative fee assessed by the board of trustees.
3 * * *
4 Section 2. This Act shall become effective upon signature by the governor or, if not
5signed by the governor, upon expiration of the time for bills to become law without signature
6by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
7vetoed by the governor and subsequently approved by the legislature, this Act shall become
8effective on the day following such approval.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 58 Engrossed 2016 Regular Session Leger
Abstract: Restricts payment options for members electing to participate in the Deferred
Retirement Option Plan (DROP) in the Firefighters' Pension and Relief Fund in the
city of New Orleans (NOFF) and provides relative to investment of the funds in
member DROP accounts and interest earned thereon.
Present law establishes the DROP within NOFF. Members may select a participation period
of up to five years in the program.
Present law allows a member who participates in DROP to also take an initial lump sum
option on his retirement benefit. Proposed law prohibits a member who elects to participate
in DROP from also exercising an initial lump sum benefit option at retirement.
Present law provides that upon expiration of the member's participation period or
termination of employment, whichever occurs first, interest shall be allocated annually to
the member's DROP account. Further provides that the balance of the member's account
cannot be diminished or impaired. Proposed law requires the board, upon expiration of
DROP participation or termination of employment, to invest DROP account balances in
liquid asset money market investments. Provides that interest shall be the actual rate of
return earned on the investments.
Proposed law permits members participating in DROP on or after Jan. 1, 2016, to make a
written election to waive the interest provisions for DROP account balances provided by
proposed law and present law and to authorize debits to his DROP account in order to have
his DROP account balance placed into the fund's investment portfolio to earn interest at a
rate based on a five-year rolling average of the actuarially determined composite rate of
return of the funds, less a two percent administrative fee.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 11:3385.1(D) and (H)(2))
Summary of Amendments Adopted by House
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HB NO. 58
The Committee Amendments Proposed by House Committee on Retirement to the
original bill:
1. Remove proposed law provision that beginning Jan. 1, 2016, administrative fees
shall not exceed 2%.
2. Remove discretion for DROP accounts to be placed in liquid asset money market
investments after DROP participation.
3. Add provision permitting a member participating in DROP on or after Jan. 1,
2016, to make a written election to place his DROP account into the fund's
investment portfolio.
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CODING: Words in struck through type are deletions from existing law; words underscored
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