HLS 16RS-4 ORIGINAL
2016 Regular Session
HOUSE BILL NO. 65
BY REPRESENTATIVE IVEY
RETIREMENT/STATE-STWIDE: Establishes a new hybrid retirement benefit structure
for members of state retirement systems first hired on or after July 1, 2018
1 AN ACT
2To amend and reenact R.S. 11:62(4)(introductory paragraph), (5)(introductory paragraph),
3 (10)(introductory paragraph), and (11)(introductory paragraph), 102(B)(1) and (3)(a)
4 and (d)(vi)(aa)(I) and (viii)(aa)(I), (C)(1)(a), (h), (j), (k), and (m) and (4)(a), (b)(i),
5 and (c), and (D)(1) and (4), 102.3, 247(A)(1), (D), and (E), 542(C)(1)(introductory
6 paragraph), 883.1(C)(1)(introductory paragraph), 927(A) and (B)(2)(a) and (b) and
7 (3)(a)(i), 1145.1(C)(1)(introductory paragraph), 1332(C)(1)(introductory paragraph)
8 and (F) and to enact R.S. 11:62(4.1), (5.1), (10.1), and (11.1), 102(C)(1)(n), 102.4,
9 542(C)(4)(e), 883.1(C)(4)(f), 1145.1(C)(4)(d), 1332(C)(4)(d), and Chapter 7 of
10 Subtitle I of Title 11 of the Louisiana Revised Statutes of 1950, comprised of R.S.
11 11:1399.1 through 1399.11, relative to benefits for new public employees whose
12 first employment making them eligible for membership in a state system occurred
13 on or after a date certain; to provide with respect to membership, credits, eligibility,
14 accruals, and benefits of such members; to provide with respect to employee and
15 employer contributions; to provide relative to system assets and liabilities
16 attributable to such members; and to provide for related matters.
17 Notice of intention to introduce this Act has been published
18 as provided by Article X, Section 29(C) of the Constitution
19 of Louisiana.
20Be it enacted by the Legislature of Louisiana:
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1 Section 1. R.S. 11:62(4)(introductory paragraph), (5)(introductory paragraph),
2(10)(introductory paragraph), and (11)(introductory paragraph), 102(B)(1) and (3)(a) and
3(d)(vi)(aa)(I) and (viii)(aa)(I), (C)(1)(a), (h), (j), (k), and (m) and (4)(a), (b)(i), and (c), and
4(D)(1) and (4), 102.3, 247(A)(1), (D), and (E), 542(C)(1)(introductory paragraph),
5883.1(C)(1)(introductory paragraph), 927(A) and (B)(2)(a) and (b) and (3)(a)(i),
61145.1(C)(1)(introductory paragraph), 1332(C)(1)(introductory paragraph) and (F) are
7hereby amended and reenacted and R.S. 11:62(4.1), (5.1), (10.1), and (11.1), 102(C)(1)(n),
8102.4, 542(C)(4)(e), 883.1(C)(4)(f), 1145.1(C)(4)(d), 1332(C)(4)(d), and Chapter 7 of
9Subtitle I of Title 11 of the Louisiana Revised Statutes of 1950, comprised of R.S. 11:1399.1
10through 1399.11 are hereby enacted to read as follows:
11 §62. Employee contribution rates established
12 Employee contributions to state and statewide public retirement systems shall
13 be paid at the following rates, except as otherwise provided by law:
14 * * *
15 (4) Louisiana School Employees' Retirement System members in Tier 1:
16 * * *
17 (4.1) Louisiana School Employees' Retirement System members in the
18 hybrid retirement plan - the amount calculated pursuant to R.S. 11:102.3.
19 (5) Louisiana State Employees' Retirement System members in Tier 1:
20 * * *
21 (5.1) Louisiana State Employees' Retirement System members in the hybrid
22 retirement plan - the amount calculated pursuant to R.S. 11:102.3.
23 * * *
24 (10) Louisiana State Police Retirement System members in Tier 1:
25 * * *
26 (10.1) Louisiana State Police Retirement System members in the hybrid
27 retirement plan - the amount calculated pursuant to R.S. 11:102.3.
28 (11) Teachers' Retirement System of Louisiana members in Tier 1:
29 * * *
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1 (11.1) Teachers' Retirement System of Louisiana members in the hybrid
2 retirement plan - the amount calculated pursuant to R.S. 11:102.3.
3 * * *
4 §102. Employer contributions; determination; state systems
5 * * *
6 B.(1) Except as provided in Subsection C of this Section for the Louisiana
7 State Employees' Retirement System and Subsection D of this Section for the
8 Teachers' Retirement System of Louisiana and except as provided in R.S. 11:102.1,
9 102.2, 102.3, and in Paragraph (5) of this Subsection, for each fiscal year,
10 commencing with Fiscal Year 1989-1990, for each of the public retirement systems
11 referenced in Subsection A of this Section, the legislature shall set the required
12 employer contribution rate as follows:
13 (a) For all plans except the hybrid plans, the rate shall be set equal to the
14 actuarially required employer contribution, as determined under Paragraph (3) of this
15 Subsection, divided by the total projected payroll of all active members of each such
16 particular system plan for the fiscal year.
17 (b) For the hybrid plans, the rate shall be set equal to the actuarially required
18 employer contribution, as determined under Paragraph (3) of this Subsection, divided
19 by the total projected payroll of all active members of the hybrid plan for the fiscal
20 year.
21 (c) Each entity funding a portion of a member's salary shall also fund the
22 employer's contribution on that portion of the member's salary at the employer
23 contribution rate specified in this Subsection.
24 * * *
25 (3) With respect to each state public retirement system, the actuarially
26 required employer contribution for each fiscal year, commencing with Fiscal Year
27 1989-1990, shall be that dollar amount equal to the sum of:
28 (a) The employer's normal cost for that fiscal year, computed as of the first
29 of the fiscal year using the system's actuarial funding method as specified in R.S.
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1 11:22 and taking into account R.S. 11:102.3 and the value of future accumulated
2 employee contributions and interest thereon, such employer's normal cost rate
3 multiplied by the total projected payroll for all active members to the middle of that
4 fiscal year. For the Louisiana State Employees' Retirement System, effective for the
5 June 30, 2010, system valuation and beginning with Fiscal Year 2011-2012, the
6 normal cost shall be determined in accordance with Subsection C of this Section.
7 For the Teachers' Retirement System of Louisiana, effective for the June 30, 2011,
8 system valuation and beginning with Fiscal Year 2012-2013, the normal cost shall
9 be determined in accordance with Subsection D of this Section.
10 * * *
11 (d) That fiscal year's payment, computed as of the first of that fiscal year and
12 projected to the middle of that fiscal year at the actuarially assumed interest rate,
13 necessary to amortize changes in actuarial liability due to:
14 * * *
15 (vi)(aa)(I) Except as provided in Subsubitem (ee)(II) of this Item, effective
16 July 1, 2004, and beginning with Fiscal Year 2000-2001, the amortization period for
17 the changes, gains, or losses of the Louisiana School Employees' Retirement System
18 provided in Items (i) through (iv) of this Subparagraph shall be thirty years, or in
19 accordance with standards promulgated by the Governmental Accounting Standards
20 Board, from the year in which the change, gain, or loss occurred. The outstanding
21 balances of amortization bases established pursuant to Items (i) through (iv) of this
22 Subparagraph before Fiscal Year 2000-2001, shall be amortized as a level dollar
23 amount from July 1, 2004, through June 30, 2029. Beginning with Fiscal Year 2003-
24 2004, and for each fiscal year thereafter, the outstanding balances of amortization
25 bases established pursuant to Items (i) through (iv) of this Subparagraph shall be
26 amortized as a level dollar amount. Beginning with Fiscal Year 2018-2019, the
27 outstanding balances of amortization bases established pursuant to Items (i) through
28 (iv) of this Subparagraph shall also be calculated in accordance with the provisions
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1 of R.S. 11:102.3.
2 * * *
3 (viii)(aa)(I) Effective July 1, 2009, and beginning with Fiscal Year 1992-
4 1993, the amortization period for the changes, gains, or losses of the Louisiana State
5 Police Retirement System provided in Items (i) through (iv) of this Subparagraph
6 shall be thirty years, or in accordance with standards promulgated by the
7 Governmental Accounting Standards Board, from the year in which the change, gain,
8 or loss occurred. The outstanding balances of amortization bases established
9 pursuant to Items (i) through (iv) of this Subparagraph before Fiscal Year 2008-
10 2009, shall be amortized as a level dollar amount from July 1, 2009, through June 30,
11 2029. Beginning with Fiscal Year 2008-2009, and for each fiscal year thereafter, the
12 outstanding balances of amortization bases established pursuant to Items (i) through
13 (iv) of this Subparagraph shall be amortized as a level dollar amount. Beginning
14 with Fiscal Year 2018-2019, the outstanding balances of amortization bases
15 established pursuant to Items (i) through (iv) of this Subparagraph shall also be
16 calculated in accordance with the provisions of R.S. 11:102.3.
17 * * *
18 C.(1) This Subsection shall be applicable to the Louisiana State Employees'
19 Retirement System effective for the June 30, 2010, system valuation and beginning
20 Fiscal Year 2011-2012. For purposes of this Subsection, "plan" or "plans" shall
21 mean a subgroup within the system characterized by the following employee
22 classifications:
23 (a) Rank-and-file members of the system whose first employment making
24 them eligible for membership in a state system occurred on or before June 30, 2018.
25 * * *
26 (h) Legislators, the governor, and the lieutenant governor whose first
27 employment making them eligible for membership in a state system occurred on or
28 before June 30, 2018.
29 * * *
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1 (j) Hazardous duty plan members as provided pursuant to R.S. 11:611 et seq
2 whose first employment making them eligible for membership in a state system
3 occurred on or before June 30, 2018.
4 (k) Judges as provided pursuant to R.S. 11:62(5)(a)(iii) and 444(A)(1)(a)(ii)
5 whose first employment making them eligible for membership in a state system
6 occurred on or before June 30, 2018.
7 * * *
8 (m) Members of the hybrid plan.
9 (n) Any other specialty retirement plan provided for a subgroup of system
10 members. If the legislation enacting such a plan is silent as to the application of this
11 Subsection, the Public Retirement Systems' Actuarial Committee shall provide for
12 the application to such plan.
13 * * *
14 (4) For each plan referenced in Paragraph (1) of this Subsection, the
15 legislature shall set the required employer contribution rate equal to the sum of the
16 following:
17 (a) The particularized normal cost rate. The normal cost rate for each fiscal
18 year shall be the employer's normal cost for the plan computed by applying the
19 method specified in R.S. 11:102(B)(1) and (3)(a) and R.S. 11:102.3 to the plan.
20 (b) The shared unfunded accrued liability rate. (i) Except as provided in
21 Item (ii) of this Subparagraph, a single rate shall be computed for each fiscal year,
22 applicable to all plans for actuarial changes, gains, and losses existing on June 30,
23 2010, or occurring thereafter, including experience and investment gains and losses,
24 which are independent of the existence of the plans listed in Paragraph (1) of this
25 Subsection, the payment and rate therefor shall be calculated as provided in
26 Paragraphs (B)(1) and (3) of this Section and R.S. 11:102.3.
27 * * *
28 (c) The particularized unfunded accrued liability rate. For actuarial changes,
29 gains, and losses, excluding experience and investment gains and losses, first
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1 recognized in the June 30, 2010, valuation or in any later valuation, attributable to
2 one or more, but not all, plans listed in Paragraph (1) of this Subsection or to some
3 new plan or plans, created, implemented, or enacted after July 1, 2010, a
4 particularized contribution rate shall be calculated as provided in Paragraphs (B)(1)
5 and (3) of this Section and R.S. 11:102.3.
6 * * *
7 D.(1) This Subsection shall be applicable to the Teachers' Retirement System
8 of Louisiana effective for the June 30, 2011, system valuation and beginning Fiscal
9 Year 2012-2013. For purposes of this Subsection, "plan" or "plans" shall mean a
10 subgroup within the system characterized by the following employee classifications:
11 (a) School lunch Plan A.
12 (b) School lunch Plan B.
13 (c) (a) Employees of an institution of postsecondary education, the Board of
14 Regents, or a postsecondary education management board who are not employed for
15 the sole purpose of providing instruction or administrative services at the primary or
16 secondary level, including at any lab school and the Louisiana School for Math,
17 Science, and the Arts, whose first employment making them eligible for membership
18 in a state system occurred on or before June 30, 2018.
19 (d) (b) Any other specialty retirement plan provided for a subgroup of
20 system members. If the legislation enacting such a plan is silent as to the application
21 of this Subsection, the Public Retirement Systems' Actuarial Committee shall
22 provide for the application to such plan.
23 (e) (c) All other teachers, as defined in R.S. 11:701(33) whose first
24 employment making them eligible for membership in a state system occurred on or
25 before June 30, 2018.
26 (f)(d) Members of the hybrid plan.
27 * * *
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1 (4) For each plan referenced in Paragraph (1) of this Subsection, the
2 legislature shall set the required employer contribution rate equal to the sum of the
3 following:
4 (a) The particularized normal cost rate. The normal cost rate for each fiscal
5 year shall be the employer's normal cost for employees in the plan computed by
6 applying the method specified in Paragraph (B)(1) and Subparagraph (B)(3)(a) of
7 this Section and R.S. 11:102.3 to the plan.
8 (b) The shared unfunded accrued liability rate. A single rate shall be
9 computed for each fiscal year, applicable to all plans for actuarial changes, gains, and
10 losses existing on June 30, 2011, or occurring thereafter, including experience and
11 investment gains and losses, which are independent of the existence of the plans
12 listed in Paragraph (1) of this Subsection, the payment and rate therefor shall be
13 calculated as provided in Paragraphs (B)(1) and (3) of this Section and R.S.
14 11:102.3.
15 (c) The particularized unfunded accrued liability rate. For actuarial changes,
16 gains, and losses, excluding experience and investment gains and losses, first
17 recognized in the June 30, 2011, valuation or in any later valuation, attributable to
18 one or more, but not all, plans listed in Paragraph (1) of this Subsection or to some
19 new plan or plans, created, implemented, or enacted after July 1, 2011, a
20 particularized contribution rate shall be calculated as provided in Paragraphs (B)(1)
21 and (3) of this Section and R.S. 11:102.3.
22 (d) The shared gross employer contribution rate difference. The gross
23 employer contribution rate difference shall be the difference between the minimum
24 gross employer contribution rate provided in Paragraph (B)(5) of this Section and the
25 aggregate employer contribution rate calculated pursuant to the provisions of
26 Subsection B of this Section.
27 * * *
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1 §102.3. Contribution rates for hybrid plan members
2 A. For the purposes of this Section, the following terms shall have the
3 following meanings, unless another meaning is clearly required by context:
4 (1) "New member" shall mean any member of a state retirement system
5 whose first employment making him eligible for membership in a state system
6 occurred on or after July 1, 2018.
7 (2) "Tier" shall mean any formal subset of new members classified by similar
8 benefit provisions.
9 B. Notwithstanding any provision of law to the contrary, new members shall
10 share the following costs equally with their employer:
11 (1) The normal cost of the new member's benefit, which shall include the
12 total monthly credit to the new member's defined contribution account.
13 (2) Any change in the new member's normal cost.
14 (3) The proportional share of the amortization cost for liability schedules
15 created on or after July 1, 2018.
16 C. For each tier, the dollar amount of costs provided for in Subsection B of
17 this Section shall be calculated each year by adding together the following:
18 (1) The normal cost for the new members in such tier computed at the
19 interest rate specified in R.S. 11:1399.5.
20 (2) That fiscal year's payment, computed as of the first of that fiscal year and
21 projected to the middle of that fiscal year at the interest rate specified in R.S.
22 11:1399.5 and using the amortization method specified in R.S. 11:102(B) and this
23 Section, necessary to amortize that portion of any unfunded accrued liability created
24 on or after July 1, 2018, that is attributable to members in the tier.
25 (3) That fiscal year's payment, computed as of the first of that fiscal year and
26 projected to the middle of that fiscal year at the interest rate, specified in R.S.
27 11:1399.5 necessary to amortize the prior year's over or underpayment of employee
28 contributions as a level dollar amount over a period of five years.
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1 D. Employee contributions for each tier shall be calculated each year by
2 dividing one half of the dollar amount total from Subsection C of this Section by the
3 projected payroll of all new members in the tier.
4 E. Employer contributions shall be calculated as otherwise provided in R.S.
5 11:102.
6 §102.4. Review of volatility
7 Following the close of Fiscal Year 2018-2019, the future volatility of the
8 then-existing schedules of each state system shall be reexamined by staff of each
9 system and of the legislature, including actuaries for both. The results of this
10 reexamination, which may identify issues to be resolved and include
11 recommendations for plan amendments, shall be reported to the Public Retirement
12 Systems' Actuarial Committee by November 1, 2019. The committee shall review
13 the results and determine what changes to the system plan provisions, if any, are
14 advisable. If appropriate, the committee shall make a recommendation to the
15 legislature on whether and what type of legislation is warranted.
16 * * *
17 §247. Automatic cost-of-living adjustments
18 A.(1) Upon application for retirement or participation in the Deferred
19 Retirement Option Plan, any member of a state or statewide retirement system or any
20 member of a state retirement system whose first employment making him eligible
21 for membership in such system occurred on or before June 30, 2018, may elect to
22 receive an actuarially reduced retirement allowance plus an annual two and one-half
23 percent cost-of-living adjustment. Such an election shall be irrevocable after the
24 effective date of retirement or after the beginning date of participation in the
25 Deferred Retirement Option Plan. The retirement allowance together with the cost-
26 of-living adjustment shall be certified by the system actuary to be actuarially
27 equivalent to the member's maximum or optional retirement allowance and shall be
28 approved by the system's board of trustees.
29 * * *
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1 D. Upon application for retirement or participation in the Deferred
2 Retirement Option Plan and upon certifying that he is contemplating availing himself
3 of the provisions of this Section, a member of a state or statewide retirement system
4 who qualifies for participation pursuant to the provisions of Paragraph (A)(1) of this
5 Section may request that the system provide actuarial estimates of the benefits that
6 such member would receive pursuant to Subsection A of this Section for the fifth,
7 tenth, and fifteenth year following the member's anticipated retirement date. The
8 system shall provide such actuarial estimates to the member upon request.
9 E. This Section shall not be applicable to recipients of disability retirement
10 benefits pursuant to R.S. 11:461 et seq. All other persons qualifying for participation
11 pursuant to the provisions of Paragraph (A)(1) of this Section who are receiving
12 disability retirement benefits pursuant to the provisions of this Title shall be eligible
13 to elect this retirement option upon conversion to a service retirement, if applicable,
14 under the provisions of this Title for each state or statewide retirement system.
15 * * *
16 §542. Experience account
17 * * *
18 C.(1) In accordance with the provisions of this Section, the board of trustees
19 may recommend to the president of the Senate and the speaker of the House of
20 Representatives that the system be permitted to grant a permanent benefit increase
21 to retirees whose first employment making them eligible for membership in a state
22 system occurred on or before June 30, 2018, and to, survivors, and beneficiaries of
23 such members whenever the conditions in this Section are satisfied and the balance
24 in the experience account is sufficient to fund such benefit fully on an actuarial basis,
25 as determined by the system's actuary. If the legislative auditor's actuary disagrees
26 with the determination of the system's actuary, a permanent benefit increase shall not
27 be granted. The board of trustees shall not grant a permanent benefit increase unless
28 such permanent benefit increase has been approved by the legislature. Any such
29 permanent benefit increase granted on or before June 30, 2015, shall be limited to
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1 and shall only be payable based on an amount not to exceed seventy thousand dollars
2 of the retiree's annual benefit. Any such permanent benefit increase granted on or
3 after July 1, 2015, shall be limited to and shall only be payable based on an amount
4 not to exceed sixty thousand dollars of the retiree's annual benefit. Effective for
5 years after July 1, 1999, and on or before June 30, 2015, the seventy-thousand dollar
6 limit shall be increased each year in an amount equal to any increase in the consumer
7 price index (U.S. city average for all urban consumers (CPI-U)) for the preceding
8 year, if any. Effective on or after July 1, 2015, the sixty-thousand dollar limit shall
9 be increased each year in an amount equal to any increase in the consumer price
10 index, (U.S. city average for all urban consumers (CPI-U)) for the twelve-month
11 period ending on the system's valuation date, if any. Any increase granted pursuant
12 to the provisions of this Section shall begin on the July first following legislative
13 approval, shall be payable annually, and shall be an amount equal to the lesser of:
14 * * *
15 (4)
16 * * *
17 (e) No member whose first employment making him eligible for membership
18 in a state system occurs on or after July 1, 2018, shall be eligible for a benefit
19 adjustment pursuant to the provisions of this Section nor shall any beneficiary who
20 receives benefits based on the death or disability of such a member be eligible for a
21 benefit adjustment pursuant to the provisions of this Section.
22 * * *
23 §883.1. Experience account
24 * * *
25 C.(1) In accordance with the provisions of this Section, the board of trustees
26 may recommend to the president of the Senate and the speaker of the House of
27 Representatives that the system be permitted to grant a permanent benefit increase
28 to retirees whose first employment making them eligible for membership in a state
29 system occurred on or before June 30, 2018, and to beneficiaries of such members
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1 whenever the conditions in this Section are satisfied and the balance in the
2 experience account is sufficient to fund such benefit fully on an actuarial basis, as
3 determined by the system's actuary. If the legislative auditor's actuary disagrees with
4 the determination of the system's actuary, a permanent benefit increase shall not be
5 granted. The board of trustees shall not grant a permanent benefit increase unless
6 such permanent benefit increase has been approved by the legislature. Any increase
7 granted pursuant to the provisions of this Section shall begin on the July first
8 following legislative approval, shall be payable annually, and shall be an amount
9 equal to the lesser of:
10 * * *
11 (4)
12 * * *
13 (f) No member whose first employment making him eligible for membership
14 in a state system occurs on or after July 1, 2018, shall be eligible for a benefit
15 adjustment pursuant to the provisions of this Section nor shall any beneficiary who
16 receives benefits based on the death or disability of such a member be eligible for a
17 benefit adjustment pursuant to the provisions of this Section.
18 * * *
19 §927. Contributions
20 A. Regardless of first date of employment making him eligible for
21 membership in a state retirement system, each Each participant shall contribute
22 monthly to the optional retirement plan the same amount which he would be required
23 to contribute to the Tier 1 regular retirement plan of the Teachers' Retirement System
24 of Louisiana if he were a member of that retirement plan. Participant contributions
25 may be made by employer pick-up in accordance with the provisions of Section
26 414(h)(2) of the United States Internal Revenue Code or any amendment thereto.
27 The entirety of each participant's contribution, less any monthly fee established by
28 the board to cover the cost of administration and maintenance of the optional
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1 retirement plan, shall be remitted to the appropriate designated company or
2 companies for application to the participant's contract or contracts.
3 B.
4 * * *
5 (2)(a) Beginning July 1, 2014, and continuing through fiscal year 2017-2018,
6 each higher education board created by Article VIII of the Constitution of Louisiana
7 and each employer institution and agency under its supervision and control shall
8 contribute to the Teachers' Retirement System of Louisiana on behalf of each
9 participant in the optional retirement plan the sum of:
10 (i) The amounts calculated pursuant to R.S. 11:102(D)(4)(b), (c), and (d) for
11 Tier 1 plans.
12 (ii) An amount equal to or greater than the equivalent of the employer's
13 portion of the Tier 1 normal cost contribution of the regular retirement plan.
14 (b) Beginning July 1, 2018, each higher education board created by Article
15 VIII of the Constitution of Louisiana and each employer institution and agency under
16 its supervision and control shall contribute to the Teachers' Retirement System of
17 Louisiana on behalf of each participant in the optional retirement plan the sum of:
18 (i) The amounts calculated pursuant to R.S. 11:102(D)(4)(b), (c), and (d) for
19 Tier 1 plans.
20 (ii) An amount not less than six and two-tenths percent of pay.
21 * * *
22 (3)(a) Beginning July 1, 2014, for all employers that are not a higher
23 education board created by Article VIII of the Constitution of Louisiana or an
24 employer institution under the supervision and control of such a board, each such
25 employer institution and board shall contribute to the Teachers' Retirement System
26 of Louisiana on behalf of each participant in the optional retirement plan the greater
27 of:
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1 (i) The amount it would have contributed if the participant were a member
2 of the Tier 1 regular retirement plan of the Teachers' Retirement System of Louisiana
3 pursuant to R.S. 11:102(D)(1).
4 * * *
5 §1145.1. Employee Experience Account
6 * * *
7 C.(1) In accordance with the provisions of this Section, the board of trustees
8 may recommend to the president of the Senate and the speaker of the House of
9 Representatives that the system be permitted to grant a cost-of-living adjustment to
10 retirees whose first employment making them eligible for membership in a state
11 system occurred on or before June 30, 2018, and to beneficiaries of such members
12 whenever the conditions in this Section are satisfied and the balance in the Employee
13 Experience Account is sufficient to fully fund such benefit on an actuarial basis, as
14 determined by the system's actuary. If the legislative actuary disagrees with the
15 determination of the system's actuary, a cost-of-living adjustment shall not be
16 granted. The board of trustees shall not grant a cost-of-living adjustment unless such
17 cost-of-living adjustment has been approved by the legislature. Any such
18 cost-of-living adjustment granted on or before June 30, 2015, shall be limited to and
19 shall only be payable based on an amount not to exceed eighty-five thousand dollars
20 of the retiree's annual benefit. Any such cost-of-living adjustment granted on or after
21 July 1, 2015, shall be limited to and shall only be payable based on an amount not
22 to exceed sixty thousand dollars of the retiree's annual benefit. Effective for years
23 after July 1, 2007, and on or before June 30, 2015, the eighty-five thousand dollar
24 limit shall be increased each year in an amount equal to the increase in the Consumer
25 Price Index (United States city average for all urban consumers (CPI-U)), as
26 prepared by the United States Department of Labor, Bureau of Labor Statistics, for
27 the preceding calendar year, if any. Effective on or after July 1, 2015, the sixty-
28 thousand dollar limit shall be increased each year in an amount equal to any increase
29 in the consumer price index (U.S. city average for all urban consumers (CPI-U)) for
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1 the twelve-month period ending on the system's valuation date, if any. Any cost-of-
2 living adjustment granted pursuant to the provisions of this Section shall begin on
3 July first following legislative approval, shall be payable annually, and shall be an
4 amount equal to the lesser of:
5 * * *
6 (4)
7 * * *
8 (d) No member whose first employment making him eligible for
9 membership in a state system occurs or after July 1, 2018, shall be eligible for a
10 benefit adjustment pursuant to the provisions of this Section nor shall any
11 beneficiary who receives benefits based on the death or disability of such a member
12 be eligible for a benefit adjustment pursuant to the provisions of this Section.
13 * * *
14 §1332. Employee Experience Account
15 * * *
16 C.(1) In accordance with the provisions of this Section, the board of trustees
17 may recommend to the president of the Senate and the speaker of the House of
18 Representatives that the system be permitted to grant a cost-of-living adjustment to
19 retirees whose first employment making them eligible for membership in a state
20 system occurred on or before June 30, 2018, and to and beneficiaries of such
21 members whenever the conditions in this Section are satisfied and the balance in the
22 Employee Experience Account is sufficient to fully fund such benefit on an actuarial
23 basis, as determined by the system's actuary. If the legislative actuary disagrees with
24 the determination of the system's actuary, a cost-of-living adjustment shall not be
25 granted. The board of trustees shall not grant a cost-of-living adjustment unless such
26 cost-of-living adjustment has been approved by the legislature. Any such
27 cost-of-living adjustment granted on or before June 30, 2015, shall be limited to and
28 shall only be payable based on an amount not to exceed eighty-five thousand dollars
29 of the retiree's annual benefit. Any such cost-of-living adjustment granted on or after
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1 July 1, 2015, shall be limited to and shall only be payable based on an amount not
2 to exceed sixty thousand dollars of the retiree's annual benefit. Effective for years
3 after July 1, 2007, and on or before June 30, 2015, the eighty-five thousand dollar
4 limit shall be increased each year in an amount equal to the increase in the consumer
5 price index (United States city average for all urban consumers (CPI-U)), as prepared
6 by the United States Department of Labor, Bureau of Labor Statistics, for the
7 preceding calendar year, if any. Effective on or after July 1, 2015, the sixty-thousand
8 dollar limit shall be increased each year in an amount equal to any increase in the
9 consumer price index (U.S. city average for all urban consumers (CPI-U)) for the
10 twelve-month period ending on the system's valuation date, if any. Any adjustment
11 granted pursuant to the provisions of this Section shall begin on July first following
12 legislative approval, shall be payable annually, and shall be an amount equal to the
13 lesser of:
14 * * *
15 (4)
16 * * *
17 (d) No member whose first employment making him eligible for
18 membership in a state system occurs or after July 1, 2018, shall be eligible for a
19 benefit adjustment pursuant to the provisions of this Section nor shall any
20 beneficiary who receives benefits based on the death or disability of such a member
21 be eligible for a benefit adjustment pursuant to the provisions of this Section.
22 * * *
23 F.(1) In addition to the cost-of-living adjustment authorized by Subsection
24 C of this Section, the board of trustees may grant a supplemental cost-of-living
25 adjustment to all retirees and beneficiaries who are at least age sixty-five, which
26 shall consist of an amount equal to two percent of the benefit being received on the
27 date of the adjustment. In order to grant such supplemental cost-of-living
28 adjustment, the board of trustees shall recommend to the president of the Senate and
29 the speaker of the House of Representatives that the system be permitted to grant
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1 such supplemental cost-of-living adjustment to retirees and beneficiaries whenever
2 the balance in the Employee Experience Account is sufficient to fully fund such
3 benefit on an actuarial basis, as determined by the system's actuary. If the legislative
4 actuary disagrees with the determination of the system's actuary, such supplemental
5 cost-of-living adjustment shall not be granted. The board of trustees shall not grant
6 such supplemental cost-of-living adjustment unless such supplemental cost-of-living
7 adjustment has been approved by the legislature. Any such supplemental
8 cost-of-living adjustment paid on or before June 30, 2015, shall be limited to and
9 shall only be payable based on an amount not to exceed eighty-five thousand dollars
10 of the retiree's annual benefit. Any such supplemental cost-of-living adjustment paid
11 on or after July 1, 2015, shall be limited to and shall only be payable based on an
12 amount not to exceed sixty thousand dollars of the retiree's annual benefit. Effective
13 on and after July 1, 2007, and on or before June 30, 2015, the eighty-five thousand
14 dollar limit shall be increased each year in an amount equal to the increase in the
15 consumer price index (United States city average for all urban consumers (CPI-U)),
16 as prepared by the United States Department of Labor, Bureau of Labor Statistics,
17 for the preceding calendar year, if any. Effective on and after July 1, 2015, the sixty-
18 thousand dollar limit shall be increased each year in an amount equal to the increase
19 in the consumer price index (United States city average for all urban consumers
20 (CPI-U)), as prepared by the United States Department of Labor, Bureau of Labor
21 Statistics, for the twelve-month period ending on the system's valuation date, if any.
22 Any cost-of-living adjustment granted pursuant to the provisions of this Subsection
23 shall begin on July first following legislative approval and shall be payable annually.
24 (2) No member whose first employment making him eligible for
25 membership in a state system occurs or after July 1, 2018, shall be eligible for a
26 benefit adjustment pursuant to the provisions of this Subsection nor shall any
27 beneficiary who receives benefits based on the death or disability of such a member
28 be eligible for a benefit adjustment pursuant to the provisions of this Subsection.
29 * * *
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1 CHAPTER 7. HYBRID PLAN FOR STATE RETIREMENT SYSTEMS
2 §1399.1. Hybrid plan creation
3 A. There is hereby created within each of the following state retirement
4 systems a hybrid plan:
5 (1) Louisiana State Employees' Retirement System.
6 (2) Teachers' Retirement System of Louisiana.
7 (3) Louisiana School Employees' Retirement System.
8 (4) State Police Retirement System.
9 B. The provisions of each system in effect on June 30, 2018, including any
10 special plans, shall be known as "Tier 1".
11 §1399.2. Definitions
12 The following terms shall have the following meanings, unless another
13 meaning is clearly required by context. Terms not otherwise defined shall have the
14 same meaning as in Tier 1.
15 (1) "Hazardous duty member" shall mean a member of the Louisiana State
16 Employees' Retirement System who, but for his date of first employment making
17 him eligible for membership in a state system, would qualify for membership in the
18 Hazardous Duty Services Plan pursuant to R.S. 11:612.
19 (2) "Particularized unfunded accrued liability" shall mean liability applicable
20 to actuarial changes, gains, and losses, excluding experience and investment gains
21 and losses, first recognized in the June 30, 2019, valuation or in any later valuation,
22 attributable to one or more, but not all, plans in a system.
23 (3) "Rank-and-file member" shall mean any member of the Louisiana State
24 Employees' Retirement System including any judge, court officer, governor,
25 lieutenant governor, clerk or sergeant-at-arms of the House of Representatives,
26 secretary or sergeant-at-arms of the Senate, or state treasurer, who is not a Hazardous
27 Duty member and whose first employment making him eligible for membership in
28 a state system occurred on or after July 1, 2018.
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1 (4) "Shared unfunded accrued liability" shall mean liability applicable to all
2 plans in a system for actuarial changes, gains, and losses, including experience and
3 investment gains and losses, which are independent of the existence of the individual
4 plans within a system.
5 §1399.3. Hybrid plan membership
6 A. State employees whose first employment making them eligible for
7 membership in one of the state systems occurred on or after July 1, 2018, shall be
8 members of the hybrid plan of their respective system. Members in the hybrid plan
9 shall participate simultaneously in a defined benefit plan and in a defined
10 contribution plan.
11 B. If a retired member of the hybrid plan returns to active service in a
12 position covered by the system from which he is receiving benefits, payment of his
13 defined benefit retirement shall cease during his period of reemployment. However,
14 such reemployment shall have no effect on payments received under the defined
15 contribution component of the plan.
16 §1399.4. Contributions and credits
17 A.(1) Each member shall contribute to the retirement system the amount
18 calculated pursuant to R.S. 11:102.3.
19 (2) Employer contributions to each retirement system shall be as provided
20 in R.S. 11:102 and 102.3.
21 B.(1) For a member of the Teachers' Retirement System of Louisiana, the
22 Louisiana School Employees' Retirement System, or a rank-and-file member of the
23 Louisiana State Employees' Retirement System, each hybrid plan member's defined
24 contribution account shall be credited with an amount equal to ten percent of pay
25 monthly.
26 (2) For a member of the State Police Retirement System or a hazardous
27 duty member, each such hybrid plan member's defined contribution account shall be
28 credited with an amount equal to twelve percent of pay monthly.
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1 (3) Every active member of the hybrid plan shall also accrue service credit
2 in the defined benefit portion of the plan each month as provided in R.S. 11:1399.5.
3 C.(1) With regards to the defined contribution portion of the hybrid plan,
4 upon receipt of employee and employer contributions, the system shall promptly pay
5 over to the appropriate designated company or companies an amount equal to one
6 half of the normal cost percentage calculated pursuant to R.S. 11:102.3, which shall
7 be credited to the employee's account.
8 (2) With regards to the defined benefit portion of the hybrid plan, the
9 remainder of the employee and employer contributions shall be applied to the
10 defined benefit normal cost and unfunded accrued liability costs as provided in R.S.
11 11:102.3.
12 §1399.5. Defined benefit portion
13 A.(1) Defined benefits in the plan shall accrue at the following rates for each
14 year of creditable service in the plan:
15 (a) For a member of the Teachers' Retirement System of Louisiana, the
16 Louisiana School Employees' Retirement System, or a rank-and-file member of the
17 Louisiana State Employees' Retirement System - one percent of the member's
18 average compensation.
19 (b) For a member of the State Police Retirement System or a hazardous duty
20 member - one and one-third one percent of the member's average compensation.
21 (2) In no event shall a member's accrued defined benefit exceed one hundred
22 percent of his average compensation.
23 B. The interest rate used to value normal cost and accrued liabilities
24 attributable to the plan shall be six percent. The provisions of this Subsection shall
25 apply to particularized liabilities of the plan as well as to any portions of shared
26 unfunded accrued liability attributable to the hybrid plan.
27 C.(1) Upon retirement, a hybrid plan member shall receive a maximum
28 defined benefit retirement allowance from his retirement system that is equivalent
29 to the percentage of his average compensation accrued each year for his creditable
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1 service in the plan pursuant to Paragraph (A)(1) of this Section multiplied by his
2 years of creditable service in the plan.
3 (2) Notwithstanding the provisions of Paragraph (1) of this Section, upon
4 retirement, a hybrid plan member may elect to receive his defined benefit in a
5 retirement allowance payable throughout his life or may elect to receive the actuarial
6 equivalent of his retirement allowance in a reduced retirement allowance payable
7 throughout life pursuant to any retirement option available to members of Tier 1 of
8 his system, including initial lump sum payment options.
9 (3) Notwithstanding the provisions of Paragraph (2) of this Subsection, no
10 member of the hybrid plan shall be eligible to participate in any deferred retirement
11 option plan or program or any similar retirement option that requires continued
12 employment for participation, nor shall such a member be eligible to participate in
13 any back-deferred retirement option plan or program.
14 §1399.6. Defined contribution portion
15 A.(1) Each member shall have a defined contribution plan account
16 maintained and administered by a qualified third-party provider as determined
17 pursuant to Subsection B of this Section.
18 (2) Each member may elect to contribute extra amounts to his defined
19 contribution account, up to applicable Internal Revenue Service limits on elective
20 deferrals.
21 B.(1) The board of trustees of each system shall select no more than three
22 companies from which contracts will be purchased for the provision of defined
23 contribution accounts for employees. In setting the criteria for this selection, the
24 board shall consider, among other things, the following:
25 (a) The portability of the contracts offered or to be offered by the company,
26 based on the number of states in which the designated company provides contracts
27 under similar plans.
28 (b) The nature and extent of the rights and benefits to be provided by the
29 contracts for participating employees and their beneficiaries.
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1 (c) The relation of the rights and benefits to the amount of the contributions
2 to be made pursuant to the provisions of this Chapter.
3 (d) The suitability of the rights and benefits to the needs and interests of
4 participating employees.
5 (e) The ability of the designated company or companies to provide the rights
6 and benefits under such contracts.
7 (2) Each system board of trustees shall select from the funds offered by each
8 provider a minimum of ten and a maximum of twenty-five funds in a range of risk
9 and return profiles that will be offered to its members. At least one of the investment
10 options selected by the board from each provider shall be a fund with a guaranteed
11 rate of return.
12 C. Upon retirement, a minimum of seventy-five percent of the value of the
13 member's account balance shall be annuitized by the company maintaining the
14 account. The member shall select the percentage of his account balance to be
15 annuitized. A member who does not elect to annuitize his entire account balance
16 may withdraw some or all of his remaining account balance as: one or more lump-
17 sum payments; a trustee-to-trustee, single-sum transfer between qualified plans; or
18 a payment made directly to an individual retirement account.
19 D. Upon death or retirement, whichever occurs first, a member with at least
20 five years of participation in the defined contribution plan shall have a vested right
21 to all employer contributions made to his account and to interest on the employee
22 and employer contributions. The rights of members terminating service prior to
23 retirement shall be as follows:
24 (1) In the event of termination prior to attaining five years of participation
25 in the defined contribution plan, the member shall be entitled to a return of all
26 employee contributions, without interest thereon. All interest and employer
27 contributions shall be forfeited to the member's retirement system.
28 (2) In the event of termination after a member attains five years of
29 participation in the defined contribution plan but prior to retirement, the member
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1 shall leave his account balance with the system and exercise the rights granted
2 pursuant to Subsection C of this Section upon attaining the first age at which he may
3 begin to draw an unreduced retirement benefit.
4 E. A member who has not terminated employment or retired may not
5 withdraw funds from his defined contribution account prior to retirement or borrow
6 against such funds.
7 F. Interest shall be credited on any balance in the member's account as long
8 as there is a balance in the account.
9 §1399.7. Retirement eligibility
10 (1) Retirement eligibility shall be as follows: A member of the Teachers'
11 Retirement System of Louisiana, the Louisiana School Employees' Retirement
12 system, or a rank-and-file member of the Louisiana State Employees' Retirement
13 System shall be eligible for retirement if he has:
14 (a) Five years or more of service, at age sixty-five or thereafter.
15 (b) Twenty years of service credit at age fifty-five, exclusive of military
16 service and unused annual and sick leave, but any person retiring under this
17 Subparagraph shall have his defined benefit, inclusive of military service credit and
18 allowable unused annual and sick leave, actuarially reduced from the earliest age that
19 he would normally become eligible for a regular retirement benefit under
20 Subparagraph (a) of this Paragraph if he had continued in service to that age.
21 (2) A member of the State Police Retirement System or a hazardous duty
22 member shall be eligible for retirement if he has:
23 (a) Twelve years or more of service, at age fifty-seven or thereafter.
24 (b) Twenty years of service credit at any age, exclusive of military service
25 and unused annual and sick leave, but any person retiring under this Subparagraph
26 shall have his defined benefit, inclusive of military service credit and allowable
27 unused annual and sick leave, actuarially reduced from the earliest age that he would
28 normally become eligible for a regular retirement benefit under Subparagraph (a) of
29 this Paragraph if he had continued in service to that age.
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1 §1399.8. Disability and death benefits
2 A.(1) The defined benefit plan disability and death benefits shall be as
3 otherwise determined and provided in Tier 1; however, the accrual rate used to
4 calculate any such benefits shall not exceed the member's accrual rate in the hybrid
5 plan.
6 (2) If the hybrid plan member has not met the eligibility requirements for
7 survivors' benefits in the applicable Tier 1 plan, the system shall give his designated
8 beneficiary or his estate the option to receive the portion of the account balance the
9 member would otherwise have been entitled to as a lump-sum payment; a trustee-to-
10 trustee, single-sum transfer between qualified plans; or a payment made directly to
11 an individual retirement account.
12 B. A member receiving disability benefits based on defined benefit plan
13 provisions shall be entitled access his defined contribution account as provided in
14 R.S. 11:1399.6(C), including interest on contributions as provided in R.S.
15 11:1399.6(D).
16 C. If distributed as death benefits, a deceased member's defined contribution
17 account shall be divided as follows:
18 (1) If there is a surviving spouse and no minor children, the spouse shall
19 have the same options with respect to the account balance that the member would
20 have had.
21 (2) If there is a surviving spouse and at least one minor child or child with
22 a disability, the surviving spouse shall receive an annuity based on one-half of the
23 account balance and the other half of the account balance shall be divided on a pro
24 rata basis between the remaining minor children and children with a disability and
25 annuitized.
26 (3) If there is no surviving spouse but there is at least one minor child the
27 account shall be divided on a pro rata basis between the minor children and children
28 with a disability and annuitized.
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1 D. If any disability retiree of the hybrid retirement plan who is under his
2 normal retirement age is restored to active service, his defined benefit retirement
3 allowance and ability to access his defined contribution account shall cease, he shall
4 again become a member of the retirement system, and he shall contribute thereafter
5 at the current rate in effect at the time he is restored to service, and if he contributes
6 for at least three years after restoration to active service, the period of time on
7 disability shall be counted as accredited service for purposes of establishing
8 retirement eligibility in the defined benefit portion of the plan, but not for
9 computation of benefits. Any prior service certificate on which his service was
10 computed at the time of his retirement shall be restored to full force and effect and,
11 in addition, upon his subsequent retirement he shall be credited with all his service
12 as a member. The remaining value of any annuity paid to the rehabilitated member
13 from his defined contribution account balance shall be converted back to a lump sum
14 and deposited into the member's defined contribution account. Contributions to the
15 defined contribution account shall resume and be added the balance in the account
16 at the time of restoration to active service.
17 §1399.9. Cost-of-living adjustments on defined benefit
18 A.(1) Each qualifying retiree and beneficiary of a hybrid plan member shall
19 have the defined benefit portion of his benefit increased permanently on July first in
20 each odd-numbered calendar year. The amount of the increase shall be the lesser of:
21 (a) Two percent of the benefit amount.
22 (b) An amount equal to the consumer price index for all urban consumers for
23 the South as calculated by the United States Department of Labor, Bureau of Labor
24 Statistics, for the twelve-month period ending on the May thirtieth immediately
25 preceding the payment of the benefit increase.
26 (2) To be eligible for the permanent benefit increases provided in this
27 Subsection, a retiree:
28 (a) Shall have been separated from employment and receiving a benefit for
29 at least one year.
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1 (b) Shall have attained his normal retirement age.
2 (3) A nonretiree survivor or beneficiary shall be eligible for the permanent
3 benefit increases provided in this Section:
4 (a) If the benefits have been received by the retiree or the beneficiary or both
5 combined for at least one year.
6 (b) If the retiree would have attained age sixty-five.
7 (4) The provisions of Subparagraph (3)(b) of this Subsection shall not apply
8 to any person who receives benefits based on the death of a disability retiree.
9 B. Each permanent benefit increase provided pursuant to this Section shall
10 be payable based only on an amount not to exceed fifty thousand dollars of the
11 recipient's annual benefit.
12 C. Each time the system actuary performs an experience study, he shall also
13 evaluate whether and to what extent contributions required to fund the benefits
14 provided for in this Section meet or exceed such liabilities. This assessment shall be
15 based on stochastic modeling.
16 §1399.10. Commingling of assets and accounting
17 Assets of the hybrid plan shall be commingled with assets of the other system
18 plans for investment purposes. Assets of this plan shall be available to fund benefits
19 of all plans within the system, including this plan. A fictitious account for this tier
20 of benefits shall be established for the purposes of accounting for assets and
21 liabilities of this plan and determining funding requirements of this plan.
22 §1399.11. Applicability
23 The provisions of the applicable Tier 1 system or plan shall apply to the
24 hybrid plan for any matter on which this Chapter is silent. In case of any conflict
25 between the provisions of Tier 1 and the hybrid plan, the hybrid plan shall prevail.
26 Section 2. This Act shall take effect and become operative if and when the proposed
27amendment of Article X of the Constitution of Louisiana contained in the Act which
28originated as House Bill No. _____ of this 2016 Regular Session of the Legislature is
29adopted at a statewide election and becomes effective.
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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 65 Original 2016 Regular Session Ivey
Abstract: Establishes a hybrid retirement plan for members of state retirement systems
whose first employment making them eligible for membership in a state system
occurred on or after July 1, 2018.
Present law establishes 4 state retirement systems—the La. State Employees' Retirement
System (LASERS), the Teachers' Retirement System of La. (TRSL), the La. School
Employees' Retirement System (LSERS), and the State Police Retirement System
(STPOL)—and provides a defined benefit retirement plan for members of each system.
Proposed law establishes a hybrid retirement plan (Hybrid Plan)—consisting of a
combination of a small defined benefit pension and a defined contribution (DC)
account—for members of each system whose first employment making them eligible for
membership in a state system occurred on or after July 1, 2018 (hereafter referred to as "new
members").
Cost Sharing
Present law establishes a fixed rate at which members must contribute to each state and
statewide retirement system. Proposed law retains present law for those who are not new
members. Further establishes a floating rate for new members based on an equal division
of the cost of the plan for new members.
Present law establishes the formula by which employer contribution rates are calculated each
year. Generally requires the employer to fund 100% of unfunded accrued liability (UAL)
payments. Proposed law requires new members to split equally the cost of their benefit
accruals (the "Normal Cost") and the cost of any UAL attributable to their plan. Does not
require new members to pay any portion of UAL created prior to the establishment of the
Hybrid Plan.
COLAs
Present law provides a mechanism for paying cost-of-living adjustments (COLAs) to retirees
of state retirement systems using investment gains over and above certain pre-determined
levels. Proposed law retains present law for those who are not new members. For new
members, proposed law establishes a pre-funded COLA mechanism, the cost of which is
split between new members and employers. Upon retirement (or death), in every odd-
numbered year, a qualifying new member or beneficiary of such will receive a COLA equal
to the lesser of:
(1)Two percent.
(2)The CPI-U for the South as calculated by the U.S. Dept. of Labor, Bureau of Labor
Statistics, for the 12-month period ending on the May thirtieth immediately
preceding the payment of the benefit increase.
Further provides that such COLA shall only be paid on the first $50,000 of a retiree or
beneficiary's benefit amount.
Proposed law establishes the following qualifications for receipt of a COLA:
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(1)Any retiree who has received a benefit for at least one year and who has attained at
least his normal retirement age.
(2)Any nonretiree beneficiary who has received a benefit for at least one year
(aggregated with any time the deceased member may have received a benefit) if the
deceased member would have attained his normal retirement age.
(3)Any disability retiree or any beneficiary who receives benefits based on the death of
a disability retiree if benefits have been received for at least one year.
Regular Retirement Benefits
Defined Benefit Plan
Present law provides a retirement benefit that combines average compensation with a
percentage multiplier for each year of service. This calculation can be rendered as:
Accrual Rate x Years of Service x Average Compensation
Present law for TRSL, LSERS, and rank-and-file members of LASERS provides an accrual
rate of 2.5% of average compensation for each year of a member's service. Proposed law
retains present law for those who are not new members. Further establishes a 1% accrual
rate for regular retirement benefit calculations for new members.
Present law for STPOL and for the Hazardous Duty Services Plan (hereafter "Haz. Duty")
members provides an accrual rate of 3.33% of average compensation for each year of such
member's service. Proposed law retains present law for those who are not new members.
Further establishes a 1.33% accrual rate for regular retirement benefit calculations for new
members.
Present law establishes a five-year vesting period for the right to a benefit from the defined
benefit plan. Proposed law retains present law for all members, regardless of the date of
hire.
DC Plan
Proposed law establishes a DC account with a third-party provider for each new member.
Requires the board of trustees of each system to select up to three third-party providers who
will administer the DC accounts for new members. Establishes criteria for the board to use
in evaluating potential third-party providers. Requires each board to select from the funds
offered by each provider a minimum of 10 and a maximum of 25 fund options in a range of
risk and return profiles that will be offered to new members in the DC plan. Requires at
least one investment option to be a fund with a guaranteed rate of return.
Proposed law provides that new member DC accounts for TRSL, LSERS, and rank-and-file
members shall be credited with 10% of pay each month. Further provides that new member
DC accounts for STPOL and hazardous duty members shall be credited with 12% of pay
each month.
Proposed law establishes a five-year vesting period for the right to employer contributions
and interest credited to the new member's account. The new member's right to access
interest on employee and employer contributions made to the DC account is triggered by the
member's retirement (regular or disability) or death, whichever occurs first.
Proposed law provides that if a member terminates employment prior to attaining five years
of participation in the defined contribution plan, the employee is entitled to a return of all
employee contributions, without interest. All interest and employer contributions will be
forfeited to the system.
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Proposed law further provides that if a member terminates employment after attaining five
years of participation in the DC plan, but prior to retirement, he must leave his account
balance with the third-party provider until the first age at which he may begin to draw an
unreduced retirement benefit and may then exercise all options in proposed law for members
who retire from the system.
Proposed law provides that upon retirement, a member must annuitize at least 75% of his
DC account balance with the third-party provider. The member may chose the percentage
of his account, up to 25%, that will not be annuitized. Any portion of the account that is not
annuitized may be withdrawn in one or more lump-sum payments or rolled to another
qualified retirement account, such as an IRA.
Proposed law prohibits a new member who has not terminated employment or retired from
withdrawing funds from his DC account or borrowing against such funds.
Retirement Eligibility
Present law for TRSL, LSERS, and rank-and-file members of LASERS provides that a
member hired on or after July 1, 2015, is eligible for regular retirement if he has:
(1)Five years of service at age 62 or thereafter.
(2)20 years of service at any age, actuarially reduced.
Proposed law provides that, for TRSL, LSERS, and rank-and-file members of LASERS, a
new member is eligible for regular retirement if he has:
(1)Five years of service at age 65 or thereafter.
(2)20 years of service at age 55 or thereafter, actuarially reduced.
Present law for STPOL and the Hazardous Duty members of LASERS provides that a
member hired on or after July 1, 2015, is eligible for regular retirement if he has:
(1)12 years of service at age 55 or thereafter.
(2)25 years of service at any age.
(3)20 years of service at any age, actuarially reduced.
Proposed law provides that for STPOL and the Haz. Duty members of LASERS, a new
member is eligible for regular retirement if he has:
(1)12 years of service at age 57 or thereafter.
(2)20 years of service at any age, actuarially reduced.
Disability & Death Benefits
Proposed law provides that disability and death benefits for new members shall be calculated
as though the member had been hired prior to July 1, 2018 ("Tier 1"); however, restricts the
accrual rate used in any such calculation to the hybrid plan rate applicable to the member.
Proposed law provides that if the new member did not meet the eligibility requirements for
the applicable Tier 1 survivors benefits, his designated beneficiary or his estate shall receive
the DC account balance the member would otherwise have been entitled to as a lump-sum
or a transfer to another qualified retirement plan.
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HB NO. 65
Proposed law provides that if a member does meet the Tier 1 survivor benefit qualifications,
his DC account shall be divided as follows:
(1)If there is a surviving spouse and at least one minor child or child with a disability,
the surviving spouse shall receive an annuity based on one half of the account
balance. The other half of the account balance shall be divided pro rata between the
minor children and children with disabilities and annuitized.
(2)If there is no surviving spouse but there is at least one minor child or child with a
disability, the account shall be divided pro rata between the minor children and
children with disabilities and annuitized.
Proposed law provides that a member receiving disability benefits from the defined benefit
plan may access and annuitize his DC account, including employer contributions and all
interest.
Proposed law provides that if a disability retiree who is under his normal retirement age is
restored to active service, his disability benefit payments and access to the balance of his DC
account shall cease. He shall resume contributions to the retirement system and if he
continues in service for at least three years after restoration, the period of time spent on
disability shall be counted toward normal retirement eligibility, but will not count towards
calculation of benefits. Requires the remaining value of any annuity based on the DC
account balance to be converted back into a lump sum and deposited into the member's
account. Further provides that contributions to the member's DC account shall resume and
be added to the balance in the account at the time he is restored to active service.
Applicability of Tier 1 Provisions
Proposed law provides that the provisions of the Tier 1 tier that the member would have been
enrolled in but for his date of hire shall apply in any case where the provisions of the Hybrid
Plan are silent.
Effective if and when the proposed amendment of Article X of the Constitution of La.
contained in the Act which originated as House Bill No. _____ of this 2016 R.S. of the
Legislature is adopted at a statewide election and becomes effective.
(Amends R.S. 11:62(4)(intro. para.), (5)(intro. para.), (10)(intro. para.), and (11)(intro.
para.), 102(B)(1) and (3)(a) and (d)(vi)(aa)(I) and (viii)(aa)(I), (C)(1)(a), (h), (j), (k), and (m)
and (4)(a), (b)(i), and (c), and (D)(1) and (4), 102.3, 247(A)(1), (D), and (E),
542(C)(1)(intro. para.), 883.1(C)(1)(intro. para.), 927(A) and (B)(2)(a) and (b) and (3)(a)(i),
1145.1(C)(1)(intro. para.), 1332(C)(1)(intro. para.) and (F); Adds R.S. 11:62(4.1), (5.1),
(10.1), and (11.1), 102(C)(1)(n), 102.4, 542(C)(4)(e), 883.1(C)(4)(f), 1145.1(C)(4)(d),
1332(C)(4)(d), and 1399.1-1399.11)
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