Sets minimum employer contributions and provides for funding deposit accounts for each state retirement system (OR NO IMPACT APV)
The passage of HB 62 is likely to alter the funding policies of state retirement systems, emphasizing the necessity for employer contributions to not fall below a specified threshold. With this bill, if the funding ratio is 80% or less, excess contributions must go towards reducing outstanding balances on unfunded accrued liabilities. Although this marks a shift in how funding is approached, it is important to note that the bill does not introduce new benefits that would incur additional actuarial costs, focusing instead on adjustments to contribution requirements.
House Bill 62 proposes to establish a Funding Deposit Account for each state retirement system, including the Louisiana State Employees’ Retirement System, Teachers’ Retirement System, Louisiana School Employees’ Retirement System, and the Louisiana State Police Retirement System. This bill sets a minimum employer contribution rate intended to ensure that systems make consistent progress towards fully funded statuses. The main aim is to restore funding to 100% when a system's funded ratio drops below 90%. It also introduces regulations concerning the allocation of excess employer contributions based on the funded ratios of these systems.
Overall sentiment surrounding HB 62 appears to be cautiously optimistic among supporters concerned about ensuring the long-term viability of retirement systems. Given that it aims to improve the fiscal health of these systems by reinforcing the importance of employer contributions, proponents argue it will provide stability. However, some skepticism exists regarding whether this policy change will effectively uplift the funding status of the systems as intended, especially in the absence of a guaranteed improvement in the funding landscape within the next five years.
A primary contention surrounding HB 62 lies in the perception of its long-term effectiveness. Critics are worried that by enforcing a minimum employer contribution while lacking new actuarial costs, the bill may lead to larger contributions than what would be deemed necessary under the current policy. This could potentially create a financial burden on employers without a guaranteed improvement in the funding ratios of the retirement systems. Therefore, while the bill is aimed at protecting retirement systems, the implications for employers and their contribution levels are a focal point of debate.