GREEN SHEET REDIGEST
HB 58 2016 Regular Session Leger
(KEYWORD, SUMMARY, AND DIGEST as amended by Senate committee
amendments)
RETIREMENT/LOCAL: Provides relative to the Deferred Retirement Option
Plan in the Firefighters' Pension and Relief Fund in the city of New Orleans
DIGEST
HB 58 Engrossed 2016 Regular Session Leger
Present law establishes the Deferred Retirement Option Plan (DROP) in the Firefighters'
Pension and Relief Fund in the city of New Orleans (NOFF). Members may select a
participation period of up to five years in the plan
Present law allows a member who participates in DROP to also take an initial lump sum
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 based on a composite rate of return of the pension fund, less an
administrative fee. Further guarantees that the balance of the member's account shall not 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 a member participating in DROP on or after Jan. 1, 2016, to make a
written election to waive the guarantee provisions for DROP account balances provided by
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 pension
fund, less a two percent administrative fee.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 11:3385.1(H)(2) and (N))
Summary of Amendments Adopted by House
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.
Page 1 of 2
Prepared by Margaret M. Corley. Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Retirement to the engrossed
bill
1. Makes technical changes.
2. Moves provision prohibiting a member who elects to participate in DROP from
also exercising an initial lump sum benefit option at retirement.
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Prepared by Margaret M. Corley.