Louisiana Senate Bill SB533

Louisiana 2018 Regular Session

• Introduced: 4/3/18
• Refer: 4/4/18

Caption

Provides for a five-year DROP period. (6/30/18) (OR INCREASE APV)

Impact

The estimated fiscal implications of SB 533 highlight an increase in actuarial costs and expenditures associated with the retirement system. As more firefighters choose to extend their participation in the DROP, the actuarial present value of future benefits will increase, subsequently raising the normal costs and unfunded accrued liabilities. On the positive side, it is anticipated that post-employment benefits (OPEB) costs may decrease, as extended DROP participation can lead to delayed premium payments for some retirees.

Summary

Senate Bill 533 proposes an extension of the Deferred Retirement Option Plan (DROP) for members of the Firefighters' Retirement System (FRS) from the current three years to five years for those who have at least 27 years of service. This change is intended to provide more flexibility and retirement benefits for long-serving firefighters, allowing them to remain in their positions longer while still securing retirement benefits. The bill acknowledges the need to support dedicated public service members while managing fiscal impacts across related retirement systems.

Sentiment

The sentiment surrounding SB 533 appears to be generally positive among lawmakers advocating for the welfare of firefighters. Proponents argue that extending the DROP period serves to recognize the dedication of firefighters and adjust the retirement benefits accordingly. However, there is a significant concern among financial experts regarding the overall fiscal sustainability of the bill, particularly its long-term actuarial implications for the retirement systems affected.

Contention

Notably, critics of the proposed extension argue that the increased actuarial costs associated with SB 533 raise concerns about its affordability. They contend that some employers may not bear the full financial responsibility for the increased costs, potentially leading to higher premiums spread across all employers in the retirement system. While some fire districts claim that this change could ultimately lead to lower overall costs for their specific circumstances, the overarching impact on the retirement funding system continues to be a point of contention that needs careful assessment.