Provides for a hybrid plan for rank and file members. (2/3 - CA 10s29(F)) (6/30/18) (EG INCREASE APV)
Impact
The legislative intent behind SB 14 is to address the long-term sustainability of LASERS while modernizing the benefits for new hires. By moving to a hybrid model, SB 14 attempts to reduce the financial burdens typically placed on taxpayers through traditional DB plans, which often guarantee specific benefits regardless of investment performance. However, the bill is expected to increase actuarial costs associated with benefit payments, with estimates indicating a fiscal impact of approximately $9.86 million over the next five years. Furthermore, the actuarial note suggests that while initial hybrid benefits might be seen as less advantageous, they could lead to better management of retirement liabilities in the long term.
Summary
Senate Bill 14 establishes a hybrid retirement plan for new rank-and-file members of the Louisiana State Employees' Retirement System (LASERS) hired on or after July 1, 2020. The hybrid plan comprises two main components: a traditional defined benefit (DB) component that offers a more modest accrual rate compared to the current plan, and a defined contribution (DC) component. This new structure aims to balance the state's fiscal responsibilities with providing retirement benefits to employees by sharing risks between the state and employees. The plan mandates contributions of 8% from employees, divided evenly between the DB and DC components.
Sentiment
The sentiment surrounding SB 14 is mixed. Supporters argue that the hybrid model is a necessary reform to ensure LASERS remains financially viable without over-relying on taxpayer contributions. These proponents include fiscal conservatives who see this as a way to mitigate future liabilities. Conversely, critics argue that the changes introduced by the bill could diminish the retirement security of state employees, especially for long-term workers who traditionally benefit more from DB plans. Concerns have also been raised regarding the adequacy of retirement benefits under the new hybrid structure, particularly for those nearing retirement age when the bill goes into effect.
Contention
Notably, the contention surrounding SB 14 stems from its potential impact on existing employees who will not transition into the new plan, thereby creating a two-tier system within LASERS. Current employees retaining their legacy plans may result in disparities in benefits between new hires and their predecessors. Moreover, the bill’s requirement for employees to assume more investment risk through the DC component raises questions about long-term security, particularly in volatile market conditions. The future implications of this restructuring, including the ability for the state to manage unfunded liabilities effectively, remain a contentious point among stakeholders.
Provides a regular schedule for permanent benefit increases for retirees of the state retirement systems. (2/3 - 10s29(F)) (6/30/12) (OR -$4,700,000,000 APV)
Provides for benefits for survivors of hazardous duty plan members killed by an intentional act of violence. (2/3 - CA 10s29(F)) (gov sig) (EN INCREASE APV)