Changes actuarial funding method for the Firefighters' Retirement System (EN DECREASE FC LF EX)
Impact
If enacted, the bill will have significant implications for the management of the Firefighters' Retirement System by streamlining the amortization process of unfunded liabilities. The changes introduced by HB21 seek to eliminate complexity and enhance the predictability of contributions required from state and local governments. The new funding method intends to address long-standing challenges related to financial shortfalls within the retirement system while aiming to safeguard the benefits for the firefighters covered under the system.
Summary
House Bill 21 aims to amend and reenact specific sections of the Louisiana Revised Statutes relating to the funding methods and amortization of unfunded accrued liabilities for the Firefighters' Retirement System. The bill stipulates that the unfunded accrued liability, as determined under the current funding method, shall be frozen, combined, and reamortized over a fifteen-year period with annual payments decreasing by one percent. This adjustment aims to provide clarity and efficiency in managing the financial obligations of the retirement system, particularly focusing on the actuarial methods used to determine required contributions from employers.
Sentiment
The sentiment around HB21 appears to be generally positive, with strong support from legislators who advocate for the stability and fairness of retirement funding for firefighters. The amendment is viewed as a proactive step toward addressing existing financial gaps and ensuring that the obligations to retired firefighters are met in a manageable way. However, there are undertones of caution regarding the long-term consequences of the frozen funding method and its potential impacts on future actuarial assessments.
Contention
While the bill has garnered overall support, there are points of contention regarding its approach to handling firefighter benefits, especially concerning how changing contribution methods might affect benefit calculations over time. Some stakeholders express concerns that amendments could limit the flexibility required to adapt the system to changing economic conditions or actuarial assessments in the future. This raises questions about the adequacy of benefits for future retirees and the long-term sustainability of the funding model established under HB21.
Provides for use of entry age normal valuation method by Louisiana State Employees' Retirement System and Teachers' Retirement System of Louisiana. (See Act) (RE DECREASE APV)