Establishes a "Back-DROP" benefit for certain members. (2/3 - CA10s29(F)) (6/30/16)
This bill significantly modifies retirement options for employees in the specified parishes—Acadia, Iberia, and St. Martin—by allowing a one-time irrevocable election to return to active membership. The financial implications for the retirement fund are noteworthy, as the act mandates that employers will need to contribute additional amounts to accommodate these 'Back-DROP' provisions starting from the 2017-2018 fiscal year. As a result, the funding and actuarial calculations associated with the DROP program will also need adjustments to ensure the financial viability of the retirement scheme for current and future beneficiaries.
Senate Bill 19 (SB19) introduces a 'Back-Deferred Retirement Option Program' aimed at certain members of the Clerks' of Court Retirement and Relief Fund. This program allows members who have already participated in the Deferred Retirement Option Plan (DROP) to rescind their participation. If they opt for rescission, they must make specific payments to the retirement fund and can return to active contributing status. The proposed legislation therefore provides an additional retirement benefit structure that includes not just a lump-sum payment but also a monthly benefit calculated based on their prior service, effectively giving members a second chance to reconsider their retirement approach under particular conditions.
Overall, the sentiment surrounding SB19 appears more favorable among those who appreciate flexibility in retirement planning. Supporters argue it offers an essential option for members who may have entered DROP prematurely and are now contemplating different retirement routes. However, there may be concerns from other stakeholders regarding the sustainability of the retirement fund, especially given the additional financial strains placed on it by reinstating contributions for previously retired members.
One of the notable points of contention regarding SB19 is the potential long-term tax implications on the retirement fund. Critics may question whether allowing members to rescind their DROP participation could create an unsustainable precedent, leading to financial strain on the fund due to the potential influx of individuals returning as active contributors. Additionally, ensuring that the additional employer contributions align with the actuarial assessments of the fund may pose challenges, especially if the projected cost turns out to be higher than expected.