HLS 19RS-307 ORIGINAL 2019 Regular Session HOUSE BILL NO. 28 BY REPRESENTATIVE IVEY Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana. RETIREMENT/STATE SYSTEMS: Establishes a hybrid retirement benefit structure for members of the state retirement systems first hired on or after July 1, 2020 1 AN ACT 2To amend and reenact R.S. 11:62(4), (5), (10), and (11), 102(B)(1) and (3)(a), (C)(2)(a) and 3 (b), (3)(a), (h), (j), (k), and (m), (6)(a), (b)(i), (c), and (d), (D)(2)(a) and (b), (3), (4), 4 (5), and (6)(a), (b), and (c), (E)(1), and (F)(1), 247(A)(1), (D), and (E), 542(C), 5 883.1(C), 927(A) and (B)(2)(a) and (b) and (3)(a)(i), 1145.1(B), 1332(B) and (F), 6 and to enact R.S. 11:62(4.1), (5.1), (10.1), and (11.1), 102(C)(3)(n), 102.7, and 7 Chapter 7 of Subtitle I of Title 11 of the Louisiana Revised Statutes of 1950, 8 comprised of R.S. 11:1399.1 through 1399.11, relative to benefits for public 9 employees whose first employment making them eligible for membership in a state 10 system occurred on or after a date certain; to provide with respect to membership, 11 credits, eligibility, accruals, and benefits of such members; to provide with respect 12 to employee and employer contributions; to provide relative to system assets and 13 liabilities attributable to such members; and to provide for related matters. 14 Notice of intention to introduce this Act has been published 15 as provided by Article X, Section 29(C) of the Constitution 16 of Louisiana. 17Be it enacted by the Legislature of Louisiana: 18 Section 1. R.S. 11:62(4), (5), (10), and (11), 102(B)(1) and (3)(a), (C)(2)(a) and (b), 19(3)(a), (h), (j), (k), and (m), (6)(a), (b)(i), (c), and (d), (D)(2)(a) and (b), (3), (4), (5), and 20(6)(a), (b), and (c), (E)(1), and (F)(1), 247(A)(1), (D), and (E), 542(C), 883.1(C), 927(A) and Page 1 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1(B)(2)(a) and (b) and (3)(a)(i), 1145.1(B), 1332(B) and (F) are hereby amended and 2reenacted and R.S. 11:62(4.1), (5.1), (10.1), and (11.1), 102(C)(3)(n), 102.7, and Chapter 7 3of Subtitle I of Title 11 of the Louisiana Revised Statutes of 1950, comprised of R.S. 411:1399.1 through 1399.11, are hereby enacted to read as follows: 5 §62. Employee contribution rates established 6 Employee contributions to state and statewide public retirement systems shall 7 be paid at the following rates, except as otherwise provided by law: 8 * * * 9 (4) Louisiana School Employees' Retirement System members in Tier 1: 10 * * * 11 (4.1) Louisiana School Employees' Retirement System members in the 12 hybrid retirement plan - the amount calculated pursuant to R.S. 11:102.7. 13 (5) Louisiana State Employees' Retirement System members in Tier 1: 14 * * * 15 (5.1) Louisiana State Employees' Retirement System members in the hybrid 16 retirement plan - the amount calculated pursuant to R.S. 11:102.7. 17 * * * 18 (10) Louisiana State Police Retirement System members in Tier 1: 19 * * * 20 (10.1) Louisiana State Police Retirement System members in the hybrid 21 retirement plan - the amount calculated pursuant to R.S. 11:102.7. 22 (11) Teachers' Retirement System of Louisiana members in Tier 1: 23 * * * 24 (11.1) Teachers' Retirement System of Louisiana members in the hybrid 25 retirement plan – the amount calculated pursuant to R.S. 11:102.7. 26 * * * 27 §102. Employer contributions; determination; state systems 28 * * * Page 2 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 B.(1) Except as provided in R.S. 11:102.1, 102.2, 102.3, 102.4, and 102.5, 2 and 102.7 and in Paragraph (5) of this Subsection, for each fiscal year, commencing 3 with Fiscal Year 1989-1990, for each of the public retirement systems referenced in 4 Subsection A of this Section, the legislature shall set the required employer 5 contribution rate as follows: 6 (a) for each system or plan For each plan except the hybrid plans, the rate 7 shall be set equal to the actuarially required employer contribution, as determined 8 pursuant to the provisions of this Section, divided by the total projected payroll of 9 all active members of each particular system or such plan for the fiscal year. 10 (b) For the hybrid plans, the rate shall be set equal to the actuarially required 11 employer contribution, as determined under Paragraph (3) of this Subsection, divided 12 by the total projected payroll of all active members of the hybrid plan for the fiscal 13 year. 14 (c) Each entity funding a portion of a member's salary shall also fund the 15 employer's contribution on that portion of the member's salary at the employer 16 contribution rate specified in this Section. 17 * * * 18 (3) With respect to each state public retirement system, the actuarially 19 required employer contribution for each fiscal year, commencing with Fiscal Year 20 1989-1990, shall be that dollar amount equal to the sum of: 21 (a) The employer's normal cost for that fiscal year, computed as of the first 22 of the fiscal year using the system's actuarial funding method as specified in R.S. 23 11:22 and taking into account R.S. 11:102.7 and the value of future accumulated 24 employee contributions and interest thereon, such employer's normal cost rate 25 multiplied by the total projected payroll for all active members to the middle of that 26 fiscal year. For the Louisiana State Employees' Retirement System, effective for the 27 June 30, 2010, system valuation and beginning with Fiscal Year 2011-2012, the 28 normal cost shall be determined in accordance with Subsection C of this Section. 29 For the Teachers' Retirement System of Louisiana, effective for the June 30, 2011, Page 3 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 system valuation and beginning with Fiscal Year 2012-2013, the normal cost shall 2 be determined in accordance with Subsection D of this Section. 3 * * * 4 C. 5 * * * 6 (2)(a) Except as provided in Subparagraph (b) of this Paragraph and in R.S. 7 11:102.5, effective July 1, 2004, and beginning with Fiscal Year 1998-1999, the 8 amortization period for the changes, gains, or losses of the system provided in Items 9 (B)(3)(d)(i) through (iv) of this Section shall be thirty years from the year in which 10 the change, gain, or loss occurred. The outstanding balances of amortization bases 11 established pursuant to Items (B)(3)(d)(i) through (iv) of this Section before Fiscal 12 Year 1998-1999, shall be amortized as a level-dollar amount from July 1, 2004, 13 through June 30, 2029. Beginning with Fiscal Year 2003-2004, and for each fiscal 14 year thereafter, the outstanding balances of amortization bases established pursuant 15 to Items (B)(3)(d)(i) through (iv) of this Section shall be amortized as a level-dollar 16 amount. Effective for the June 30, 2010 system valuation and beginning with Fiscal 17 Year 2011-2012, amortization payments for changes in actuarial liability shall be 18 determined in accordance with this Subsection. Beginning with Fiscal Year 2020- 19 2021, the outstanding balances of amortization bases established pursuant to 20 (B)(3)(d)(i) through (iv) of this Section shall also be calculated in accordance with 21 the provisions of R.S. 11:102.7. 22 (b) Notwithstanding the provisions of Subparagraph (a) of this Paragraph, 23 effective for the June thirtieth valuation following the fiscal year in which the system 24 first attains a funded percentage of seventy or more pursuant to R.S. 11:542 and for 25 every year thereafter, the amortization period for the changes, gains, or losses of the 26 system provided in Items (B)(3)(d)(i) through (iv) of this Section occurring in that 27 year or thereafter shall be twenty years from the year in which the change, gain, or 28 loss occurred. Beginning with Fiscal Year 2020-2021, the outstanding balances of Page 4 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 amortization bases established pursuant to (B)(3)(d)(i) through (iv) of this Section 2 shall also be calculated in accordance with the provisions of R.S. 11:102.7. 3 * * * 4 (3) The provisions of this Paragraph and Paragraphs (4) through (9) of this 5 Subsection shall be effective for the June 30, 2010 system valuation and beginning 6 Fiscal Year 2011-2012. For purposes of this Subsection, "plan" or "plans" shall 7 mean a subgroup within the system characterized by the following employee 8 classifications: 9 (a) Rank-and-file members of the system whose first employment making 10 them eligible for membership in a state system occurred on or before June 30, 2020. 11 * * * 12 (h) Legislators, the governor, and the lieutenant governor whose first 13 employment making them eligible for membership in a state system occurred on or 14 before June 30, 2020. 15 * * * 16 (j) Hazardous duty plan members as provided pursuant to R.S. 11:611 et seq. 17 whose first employment making them eligible for membership in a state system 18 occurred on or before June 30, 2020. 19 (k) Judges as provided pursuant to R.S. 11:62(5)(a)(iii) and 444(A)(1)(a)(ii) 20 whose first employment making them eligible for membership in a state system 21 occurred on or before June 30, 2020. 22 * * * 23 (m) Members of the hybrid plan. 24 (n) Any other specialty retirement plan provided for a subgroup of system 25 members. If the legislation enacting such a plan is silent as to the application of this 26 Subsection, the Public Retirement Systems' Actuarial Committee shall provide for 27 the application to such plan. 28 * * * Page 5 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 (6) For each plan referenced in Paragraph (3) 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 the plan computed by applying the 6 method specified in R.S. 11:102(B)(1) and (3)(a) and R.S. 11:102.7 to the plan. 7 (b) The shared unfunded accrued liability rate. (i) Except as provided in 8 Item (ii) of this Subparagraph, a single rate shall be computed for each fiscal year, 9 applicable to all plans for actuarial changes, gains, and losses existing on June 30, 10 2010, or occurring thereafter, including experience and investment gains and losses, 11 which are independent of the existence of the plans listed in Paragraph (3) of this 12 Subsection, the payment and rate therefor shall be calculated as provided in this 13 Subsection and Paragraphs (B)(1) and (3) of this Section and R.S. 11:102.7. 14 * * * 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, 2010 valuation or in any later valuation, attributable to 18 one or more, but not all, plans listed in Paragraph (3) of this Subsection or to some 19 new plan or plans, created, implemented, or enacted after July 1, 2010, a 20 particularized contribution rate shall be calculated as provided in this Subsection and 21 Paragraphs (B)(1) and (3) of this Section and R.S. 11:102.7. 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 and R.S. 11:102.7. 27 D. 28 * * * Page 6 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 (2)(a) Except as provided in Subparagraph (b) of this Paragraph and in R.S. 2 11:102.5, effective July 1, 2004, and beginning with Fiscal Year 2000-2001, the 3 amortization period for the changes, gains, or losses of the system provided in Items 4 (B)(3)(d)(i) through (iv) of this Section shall be thirty years from the year in which 5 the change, gain, or loss occurred. The outstanding balances of amortization bases 6 established pursuant to Items (B)(3)(d)(i) through (iv) of this Section before Fiscal 7 Year 2000-2001, shall be amortized as a level-dollar amount from July 1, 2004, 8 through June 30, 2029. Beginning with Fiscal Year 2003-2004, and for each fiscal 9 year thereafter, the outstanding balances of amortization bases established pursuant 10 to Items (B)(3)(d)(i) through (iv) of this Section shall be amortized as a level-dollar 11 amount. Effective for the June 30, 2011 system valuation and beginning with Fiscal 12 Year 2012-2013, amortization payments for changes in actuarial liability shall be 13 determined in accordance with this Subsection. Beginning with Fiscal Year 2020- 14 2021, the outstanding balances of amortization bases established pursuant to 15 (B)(3)(d)(i) through (iv) of this Section shall also be calculated in accordance with 16 the provisions of R.S. 11:102.7. 17 (b) Notwithstanding the provisions of Subparagraph (a) of this Paragraph, 18 effective for the June thirtieth valuation following the fiscal year in which the system 19 first attains a funded percentage of seventy or more pursuant to R.S. 11:883.1 and 20 for every year thereafter, the amortization period for the changes, gains, or losses of 21 the system provided in Items (B)(3)(d)(i) through (iv) of this Section occurring in 22 that year or thereafter shall be twenty years from the year in which the change, gain, 23 or loss occurred. Beginning with Fiscal Year 2020-2021, the outstanding balances 24 of amortization bases established pursuant to (B)(3)(d)(i) through (iv) of this Section 25 shall also be calculated in accordance with the provisions of R.S. 11:102.7. 26 * * * 27 (3) The provisions of this Paragraph and Paragraphs (4) through (9) of this 28 Subsection shall be effective for the June 30, 2011 system valuation and beginning 29 Fiscal Year 2012-2013. For purposes of this Subsection, "plan" or "plans" shall Page 7 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 mean a subgroup within the system characterized by the following employee 2 classifications: 3 (a) Employees of an institution of postsecondary education, the Board of 4 Regents, or a postsecondary education management board who are not employed for 5 the sole purpose of providing instruction or administrative services at the primary or 6 secondary level, including at any lab school and the Jimmy D. Long, Sr. Louisiana 7 School for Math, Science, and the Arts whose first employment making them eligible 8 for membership in a state system occurred on or before June 30, 2020. 9 (b) 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 (c) All other teachers, as defined in R.S. 11:701(33), including members paid 14 from school food service funds as provided in R.S. 11:801 and 811 whose first 15 employment making them eligible for membership in a state system occurred on or 16 before June 30, 2020. 17 (d) Members of the hybrid plan. 18 (4) Effective for the June 30, 2011 system valuation and beginning with 19 Fiscal Year 2012-2013, the normal cost calculated pursuant to Subparagraph 20 (B)(3)(a) of this Section and R.S. 11:102.7, shall be calculated separately for each 21 particular plan within the system. An employer shall pay employer contributions for 22 each employee at the rate applicable to the plan of which that employee is a member. 23 (5) Effective for the June 30, 2011 system valuation and beginning with 24 Fiscal Year 2012-2013, changes in actuarial liability due to legislation, changes in 25 governmental organization, or reclassification of employees or positions shall be 26 calculated individually for each particular plan within the system based on each 27 plan's actuarial experience as further provided in Subparagraph (6)(c) of this 28 Subsection and R.S. 11:102.7. Page 8 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 (6) For each plan referenced in Paragraph (3) 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. 11:102.7 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 (3) of this Subsection, the payment and rate therefor shall be 13 calculated as provided in this Subsection and Paragraphs (B)(1) and (3) of this 14 Section and R.S. 11:102.7. 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 (3) 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 this Subsection and 21 Paragraphs (B)(1) and (3) of this Section and R.S. 11:102.7. 22 * * * 23 E.(1) Except as provided in Paragraphs (2) and (3) of this Subsection and in 24 R.S. 11:102.5, effective July 1, 2004, and beginning with Fiscal Year 2000-2001, the 25 amortization period for the changes, gains, or losses of the Louisiana School 26 Employees' Retirement System provided in Items (B)(3)(d)(i) through (iv) of this 27 Section shall be thirty years from the year in which the change, gain, or loss 28 occurred. The outstanding balances of amortization bases established pursuant to 29 Items (B)(3)(d)(i) through (iv) of this Section before Fiscal Year 2000-2001, shall Page 9 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 be amortized as a level-dollar amount from July 1, 2004, through June 30, 2029. 2 Beginning with Fiscal Year 2003-2004, and for each fiscal year thereafter, the 3 outstanding balances of amortization bases established pursuant to Items (B)(3)(d)(i) 4 through (iv) of this Section shall be amortized as a level-dollar amount. Beginning 5 with Fiscal Year 2020-2021, the outstanding balances of amortization bases 6 established pursuant to (B)(3)(d)(i) through (iv) of this Section shall also be 7 calculated in accordance with the provisions of R.S. 11:102.7. 8 * * * 9 F.(1) Except as provided in Paragraph (2) of this Subsection and in R.S. 10 11:102.5, effective July 1, 2009, and beginning with Fiscal Year 1992-1993, the 11 amortization period for the changes, gains, or losses of the Louisiana State Police 12 Retirement System provided in Items (B)(3)(d)(i) through (iv) of this Section shall 13 be thirty years from the year in which the change, gain, or loss occurred. The 14 outstanding balances of amortization bases established pursuant to Items (B)(3)(d)(i) 15 through (iv) of this Section before Fiscal Year 2008-2009 shall be amortized as a 16 level-dollar amount from July 1, 2009, through June 30, 2029. Beginning with 17 Fiscal Year 2008-2009, and for each fiscal year thereafter, the outstanding balances 18 of amortization bases established pursuant to Items (B)(3)(d)(i) through (iv) of this 19 Section shall be amortized as a level-dollar amount. Beginning with Fiscal Year 20 2020-2021, the outstanding balances of amortization bases established pursuant to 21 (B)(3)(d)(i) through (iv) of this Section shall also be calculated in accordance with 22 the provisions of R.S. 11:102.7. 23 * * * 24 §102.7. Contribution rates for hybrid plan members 25 A. For the purposes of this Section, the following terms shall have the 26 following meanings unless another meaning is clearly required by context: 27 (1) "New member" shall mean any member of a state retirement system 28 whose first employment making him eligible for membership in a state system 29 occurred on or after July 1, 2020. Page 10 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 (2) "Tier" shall mean any formal subset of new members classified by 2 similar benefit provisions. 3 B. Notwithstanding any provision of law to the contrary, new members shall 4 share the following costs equally with their employer: 5 (1) The normal cost of the new member's benefit, which shall include the 6 total monthly credit to the new member's defined contribution account. 7 (2) Any change in the new member's normal cost. 8 (3) The proportional share of the amortization cost for liability schedules 9 created on or after July 1, 2020. 10 C. For each tier, the dollar amount of costs provided for in Subsection B of 11 this Section shall be calculated each year by adding together the following: 12 (1) The normal cost for the new members in such tier computed at the 13 interest rate specified in R.S. 11:1399.5. 14 (2) That fiscal year's payment, computed as of the first of that fiscal year and 15 projected to the middle of that fiscal year at the interest rate specified in R.S. 16 11:1399.5 and using the amortization method specified in R.S. 11:102, 102.1, 102.2, 17 102.3, and 102.4, and this Section, necessary to amortize that portion of any 18 unfunded accrued liability created on or after July 1, 2020, that is attributable to 19 members in the tier. 20 (3) 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, necessary to amortize the prior year's over or underpayment of employee 23 contributions as a level dollar amount over a period of five years. 24 D. Employee contributions for each tier shall be calculated each year by 25 dividing one half of the dollar amount total from Subsection C of this Section by the 26 projected payroll of all new members in the tier. 27 E. Employer contributions shall be calculated as otherwise provided in R.S. 28 11:102. 29 * * * Page 11 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 §247. Automatic cost-of-living adjustments 2 A.(1) Upon application for retirement or participation in the Deferred 3 Retirement Option Plan, any member of a state or statewide retirement system or any 4 member of a state retirement system whose first employment making him eligible 5 for membership in such system occurred on or before June 30, 2020, may elect to 6 receive an actuarially reduced retirement allowance plus an annual two and one-half 7 percent cost-of-living adjustment. Such an election shall be irrevocable after the 8 effective date of retirement or after the beginning date of participation in the 9 Deferred Retirement Option Plan. The retirement allowance together with the cost- 10 of-living adjustment shall be certified by the system actuary to be actuarially 11 equivalent to the member's maximum or optional retirement allowance and shall be 12 approved by the system's board of trustees. 13 * * * 14 D. Upon application for retirement or participation in the Deferred 15 Retirement Option Plan and upon certifying that he is contemplating availing himself 16 of the provisions of this Section, a an eligible member of a state or statewide 17 retirement system may request that the system provide actuarial estimates of the 18 benefits that such member would receive pursuant to Subsection A of this Section 19 for the fifth, tenth, and fifteenth year following the member's anticipated retirement 20 date. The system shall provide such actuarial estimates to the member upon request. 21 E. This Section shall not be applicable to recipients of disability retirement 22 benefits pursuant to R.S. 11:461 et seq. All other eligible persons receiving 23 disability retirement benefits pursuant to the provisions of this Title shall be eligible 24 to elect this retirement option upon conversion to a service retirement, if applicable, 25 under the provisions of this Title for each state or statewide retirement system. 26 * * * 27 §542. Experience account 28 * * * Page 12 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 C.(1) In accordance with the provisions of this Section, the board of trustees 2 may recommend to the president of the Senate and the speaker of the House of 3 Representatives that the system be permitted to grant a permanent benefit increase 4 to retirees whose first employment making them eligible for membership in a state 5 system occurred on or before June 30, 2020, and to, survivors, and beneficiaries of 6 such members whenever the conditions in this Section are satisfied. The board of 7 trustees shall not grant a permanent benefit increase unless such permanent benefit 8 increase has been approved by the legislature. 9 (2) No member whose first employment making him eligible for 10 membership in a state system occurs on or after July 1, 2020, shall be eligible for a 11 benefit adjustment pursuant to the provisions of this Section nor shall any 12 beneficiary who receives benefits based on the death or disability of such a member 13 be eligible for a benefit adjustment pursuant to the provisions of this Section. 14 * * * 15 §883.1. Experience account 16 * * * 17 C.(1) In accordance with the provisions of this Section, the board of trustees 18 may recommend to the president of the Senate and the speaker of the House of 19 Representatives that the system be permitted to grant a permanent benefit increase 20 to retirees whose first employment making them eligible for membership in a state 21 system occurred on or before June 30, 2020, and to and beneficiaries of such 22 members whenever the conditions in this Section are satisfied. The board of trustees 23 shall not grant a permanent benefit increase unless such permanent benefit increase 24 has been approved by the legislature. 25 (2) No member whose first employment making him eligible for 26 membership in a state system occurs on or after July 1, 2020, shall be eligible for a 27 benefit adjustment pursuant to the provisions of this Section nor shall any 28 beneficiary who receives benefits based on the death or disability of such a member 29 be eligible for a benefit adjustment pursuant to the provisions of this Section. Page 13 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 * * * 2 §927. Contributions 3 A. Regardless of the date of employment making him eligible for 4 membership in a state retirement system, each Each participant shall contribute 5 monthly to the optional retirement plan the same amount which he would be required 6 to contribute to the Tier 1 regular retirement plan of the Teachers' Retirement System 7 of Louisiana if he were a member of that retirement plan. Participant contributions 8 may be made by employer pick-up in accordance with the provisions of Section 9 414(h)(2) of the United States Internal Revenue Code or any amendment thereto. 10 The entirety of each participant's contribution, less any monthly fee established by 11 the board to cover the cost of administration and maintenance of the optional 12 retirement plan, shall be remitted to the appropriate designated company or 13 companies for application to the participant's contract or contracts. 14 B. 15 * * * 16 (2)(a) Beginning July 1, 2014, and continuing through Fiscal Year 2017- 17 2018, each higher education board created by Article VIII of the Constitution of 18 Louisiana and each employer institution and agency under its supervision and control 19 shall contribute to the Teachers' Retirement System of Louisiana on behalf of each 20 participant in the optional retirement plan the sum of: 21 (i) The amounts calculated pursuant to R.S. 11:102(D)(6)(b), (c), and (d) for 22 Tier 1 plans. 23 (ii) An amount equal to or greater than the equivalent of the employer's 24 portion of the Tier 1 normal cost contribution of the regular retirement plan. 25 (b) Beginning July 1, 2018, each higher education board created by Article 26 VIII of the Constitution of Louisiana and each employer institution and agency under 27 its supervision and control shall contribute to the Teachers' Retirement System of 28 Louisiana on behalf of each participant in the optional retirement plan the sum of: Page 14 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 (i) The amounts calculated pursuant to R.S. 11:102(D)(6)(b), (c), and (d) for 2 Tier 1 plans. 3 (ii) An amount not less than six and two-tenths percent of pay. 4 * * * 5 (3)(a) Beginning July 1, 2014, for each employer that is not a higher 6 education board created by Article VIII of the Constitution of Louisiana or an 7 employer institution under the supervision and control of such a board, each such 8 employer institution and board shall contribute to the Teachers' Retirement System 9 of Louisiana on behalf of each participant in the optional retirement plan the greater 10 of: 11 (i) The amount it would have contributed if the participant were a member 12 of the Tier 1 regular retirement plan of the Teachers' Retirement System of Louisiana 13 pursuant to R.S. 11:102(D)(3). 14 * * * 15 §1145.1. Experience account 16 * * * 17 B.(1) In accordance with the provisions of this Section, the board of trustees 18 may recommend to the president of the Senate and the speaker of the House of 19 Representatives that the system be permitted to grant a permanent benefit increase 20 to retirees whose first employment making them eligible for membership in a state 21 system occurred on or before June 30, 2020, and to and beneficiaries of such 22 members whenever the conditions in this Section are satisfied. The board of trustees 23 shall not grant a permanent benefit increase unless such permanent benefit increase 24 has been approved by the legislature. 25 (2) No member whose first employment making him eligible for 26 membership in a state system occurs on or after July 1, 2020, shall be eligible for a 27 benefit adjustment pursuant to the provisions of this Section nor shall any 28 beneficiary who receives benefits based on the death or disability of such a member 29 be eligible for a benefit adjustment pursuant to the provisions of this Section. Page 15 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 * * * 2 §1332. Experience account 3 * * * 4 B.(1) In accordance with the provisions of this Section, the board of trustees 5 may recommend to the president of the Senate and the speaker of the House of 6 Representatives that the system be permitted to grant a permanent benefit increase 7 to retirees whose first employment making them eligible for membership in a state 8 system occurred on or before June 30, 2020, and to and beneficiaries of such 9 members whenever the conditions in this Section are satisfied. The board of trustees 10 shall not grant a permanent benefit increase unless such permanent benefit increase 11 has been approved by the legislature. 12 (2) No member whose first employment making him eligible for 13 membership in a state system occurs on or after July 1, 2020, shall be eligible for a 14 benefit adjustment pursuant to the provisions of this Section nor shall any 15 beneficiary who receives benefits based on the death or disability of such a member 16 be eligible for a benefit adjustment pursuant to the provisions of this Section. 17 * * * 18 F.(1) In addition to the permanent benefit increase authorized by Subsection 19 B of this Section, the board of trustees may grant a supplemental permanent benefit 20 increase to all retirees and beneficiaries who are at least age sixty-five and who 21 retired on or before June 30, 2001. This supplemental increase shall consist of an 22 amount equal to two percent of the benefit being received on the date of the increase. 23 In order to grant such supplemental permanent benefit increase, the board of trustees 24 shall recommend to the president of the Senate and the speaker of the House of 25 Representatives that the system be permitted to grant such supplemental permanent 26 benefit increase to retirees and beneficiaries whenever the balance in the experience 27 account is sufficient to fully fund such benefit on an actuarial basis, as determined 28 by the system's actuary. If the legislative actuary disagrees with the determination 29 of the system's actuary, such supplemental permanent benefit increase shall not be Page 16 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 granted. The board of trustees shall not grant such supplemental permanent benefit 2 increase unless such supplemental permanent benefit increase has been approved by 3 the legislature. Any such supplemental permanent benefit increase paid on or before 4 June 30, 2015, shall be limited to and shall be payable based only on an amount not 5 to exceed eighty-five thousand dollars of the retiree's annual benefit. Any such 6 supplemental permanent benefit increase paid on or after July 1, 2015, shall be 7 limited to and shall be payable based only on an amount not to exceed sixty thousand 8 dollars of the retiree's annual benefit. Effective on and after July 1, 2007, and on or 9 before June 30, 2015, the eighty-five thousand dollar limit shall be increased each 10 year in an amount equal to the increase in the CPI-U for the preceding calendar year, 11 if any. Effective on and after July 1, 2015, the sixty-thousand-dollar limit shall be 12 increased each year in an amount equal to the increase in the CPI-U for the twelve- 13 month period ending on the system's valuation date, if any. Any permanent benefit 14 increase granted pursuant to the provisions of this Subsection shall begin on the July 15 first following legislative approval and shall be payable annually. 16 (2) No member whose first employment making him eligible for 17 membership in a state system occurs on or after July 1, 2020, shall be eligible for a 18 benefit adjustment pursuant to the provisions of this Section nor shall any 19 beneficiary who receives benefits based on the death or disability of such a member 20 be eligible for a benefit adjustment pursuant to the provisions of this Section. 21 * * * 22 CHAPTER 7. HYBRID PLAN FOR STATE RETIREMENT SYSTEMS 23 §1399.1. Hybrid plan creation 24 A. There is hereby created within each of the following state retirement 25 systems a hybrid plan: 26 (1) Louisiana State Employees' Retirement System. 27 (2) Teachers' Retirement System of Louisiana. 28 (3) Louisiana School Employees' Retirement System. 29 (4) State Police Retirement System. Page 17 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 B. The provisions of each system in effect on June 30, 2020, including any 2 special plans, shall be known as "Tier 1". 3 §1399.2. Definitions 4 The following terms shall have the following meanings, unless another 5 meaning is clearly required by context. Terms not otherwise defined shall have the 6 same meaning as in Tier 1. 7 (1) "Hazardous duty member" shall mean a member of the Louisiana State 8 Employees' Retirement System who, but for his date of first employment making 9 him eligible for membership in a state system, would qualify for membership in the 10 Hazardous Duty Services Plan pursuant to R.S. 11:612. 11 (2) "Particularized unfunded accrued liability" shall mean liability applicable 12 to actuarial changes, gains, and losses, excluding experience and investment gains 13 and losses, first recognized in the June 30, 2021, valuation or in any later valuation, 14 attributable to one or more, but not all, plans in a system. 15 (3) "Rank-and-file member" shall mean any member of the Louisiana State 16 Employees' Retirement System including any judge, court officer, governor, 17 lieutenant governor, clerk or sergeant-at-arms of the House of Representatives, 18 secretary or sergeant-at-arms of the Senate, or state treasurer, who is not a hazardous 19 duty member and whose first employment making him eligible for membership in 20 a state system occurred on or after July 1, 2020. 21 (4) "Shared unfunded accrued liability" shall mean liability applicable to all 22 plans in a system for actuarial changes, gains, and losses, including experience and 23 investment gains and losses, which are independent of the existence of the individual 24 plans within a system. 25 §1399.3. Hybrid plan membership 26 A. State employees whose first employment making them eligible for 27 membership in one of the state systems occurred on or after July 1, 2020, shall be 28 members of the hybrid plan of their respective system. Members in the hybrid plan Page 18 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 shall participate simultaneously in a defined benefit plan and in a defined 2 contribution plan. 3 B. If a retired member of the hybrid plan returns to active service in a 4 position covered by the system from which he is receiving benefits, payment of his 5 defined benefit retirement shall cease during his period of reemployment. However, 6 such reemployment shall have no effect on payments received under the defined 7 contribution component of the plan. 8 §1399.4. Contributions and credits 9 A.(1) Each member shall contribute to the retirement system the amount 10 calculated pursuant to R.S. 11:102.7. 11 (2) Employer contributions to each retirement system shall be as provided 12 in R.S. 11:102 and 102.7. 13 B.(1) For a member of the Teachers' Retirement System of Louisiana, the 14 Louisiana School Employees' Retirement System, or a rank-and-file member of the 15 Louisiana State Employees' Retirement System, each hybrid plan member's defined 16 contribution account shall be credited with an amount equal to ten percent of pay 17 monthly. 18 (2) For a member of the State Police Retirement System or a hazardous duty 19 member, each such hybrid plan member's defined contribution account shall be 20 credited with an amount equal to twelve percent of pay monthly. 21 (3) Every active member of the hybrid plan shall also accrue service credit 22 in the defined benefit portion of the plan each month as provided in R.S. 11:1399.5. 23 C.(1) With regards to the defined contribution portion of the hybrid plan, 24 upon receipt of employee and employer contributions, the system shall promptly pay 25 over to the appropriate designated company or companies an amount equal to one 26 half of the normal cost percentage calculated pursuant to R.S. 11:102.7, which shall 27 be credited to the employee's account. 28 (2) With regards to the defined benefit portion of the hybrid plan, the 29 remainder of the employee and employer contributions shall be applied to the Page 19 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 defined benefit normal cost and unfunded accrued liability costs as provided in R.S. 2 11:102.7. 3 §1399.5. Defined benefit portion 4 A.(1) Defined benefits in the plan shall accrue at the following rates for each 5 year of creditable service in the plan: 6 (a) For a member of the Teachers' Retirement System of Louisiana, the 7 Louisiana School Employees' Retirement System, or a rank-and-file member of the 8 Louisiana State Employees' Retirement System - one percent of the member's 9 average compensation. 10 (b) For a member of the State Police Retirement System or a hazardous duty 11 member – one and one-third percent of the member's average compensation. 12 (2) In no event shall a member's accrued defined benefit exceed one hundred 13 percent of his average compensation. 14 B. The interest rate used to value normal cost and accrued liabilities 15 attributable to the plan shall be six percent. The provisions of this Subsection shall 16 apply to particularized liabilities of the plan as well as to any portions of shared 17 unfunded accrued liability attributable to the hybrid plan. 18 C.(1) Upon retirement, a hybrid plan member shall receive a maximum 19 defined benefit retirement allowance from his retirement system that is equivalent 20 to the percentage of his average compensation accrued each year for his creditable 21 service in the plan pursuant to Paragraph (A)(1) of this Section multiplied by his 22 years of creditable service in the plan. 23 (2) Notwithstanding the provisions of Paragraph (1) of this Subsection, upon 24 retirement, a hybrid plan member may elect to receive his defined benefit in a 25 retirement allowance payable throughout his life or may elect to receive the actuarial 26 equivalent of his retirement allowance in a reduced retirement allowance payable 27 throughout life pursuant to any retirement option available to members of Tier 1 of 28 his system, including initial lump sum payment options. Page 20 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 (3) Notwithstanding the provisions of Paragraph (2) of this Subsection, no 2 member of the hybrid plan shall be eligible to participate in any deferred retirement 3 option plan or program or any similar retirement option that requires continued 4 employment for participation, nor shall such a member be eligible to participate in 5 any back-deferred retirement option plan or program. 6 §1399.6. Defined contribution portion 7 A.(1) Each member shall have a defined contribution plan account 8 maintained and administered by a qualified private provider as determined pursuant 9 to Subsection B of this Section. 10 (2) Each member may elect to contribute extra amounts to his defined 11 contribution account, up to applicable Internal Revenue Code limits on elective 12 deferrals. 13 B.(1) The board of trustees of each system shall select no more than three 14 companies from which contracts will be purchased for the provision of defined 15 contribution accounts for employees. In setting the criteria for this selection, the 16 board shall consider, among other things, the following: 17 (a) The portability of the contracts offered or to be offered by the company, 18 based on the number of states in which the designated company provides contracts 19 under similar plans. 20 (b) The nature and extent of the rights and benefits to be provided by the 21 contracts for participating employees and their beneficiaries. 22 (c) The relation of the rights and benefits to the amount of the contributions 23 to be made pursuant to the provisions of this Chapter. 24 (d) The suitability of the rights and benefits to the needs and interests of 25 participating employees. 26 (e) The ability of the designated company or companies to provide the rights 27 and benefits under such contracts. 28 (2) Each system board of trustees shall select from the funds offered by each 29 provider a minimum of ten and a maximum of twenty-five funds in a range of risk Page 21 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 and return profiles that will be offered to its members. At least one of the investment 2 options selected by the board from each provider shall be a fund with a guaranteed 3 rate of return. 4 C. Upon retirement, a minimum of seventy-five percent of the value of the 5 member's account balance shall be annuitized by the company maintaining the 6 account. The member shall select the percentage of his account balance to be 7 annuitized. A member who does not elect to annuitize his entire account balance 8 may withdraw some or all of his remaining account balance as: one or more lump- 9 sum payments; a trustee-to-trustee, single-sum transfer between qualified plans; or 10 a payment made directly to an individual retirement account. 11 D. Upon death or retirement, whichever occurs first, a member with at least 12 five years of participation in the defined contribution plan shall have a vested right 13 to all employer contributions made to his account and to interest on the employee 14 and employer contributions. The rights of members terminating service prior to 15 retirement shall be as follows: 16 (1) In the event of termination prior to attaining five years of participation 17 in the defined contribution plan, the member shall be entitled to a return of all 18 employee contributions, without interest thereon. All interest and employer 19 contributions shall be forfeited to the member's retirement system. 20 (2) In the event of termination after a member attains five years of 21 participation in the defined contribution plan but prior to retirement, the member 22 shall leave his account balance with the system and exercise the rights granted 23 pursuant to Subsection C of this Section upon attaining the first age at which he may 24 begin to draw an unreduced retirement benefit. 25 E. A member who has not terminated employment or retired may not 26 withdraw funds from his defined contribution account prior to retirement or borrow 27 against such funds. 28 F. Interest shall be credited on any balance in the member's account as long 29 as there is a balance in the account. Page 22 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 §1399.7. Retirement eligibility 2 Retirement eligibility shall be as follows: 3 (1) A member of the Teachers' Retirement System of Louisiana, the 4 Louisiana School Employees' Retirement system, or a rank-and-file member of the 5 Louisiana State Employees' Retirement System shall be eligible for retirement if he 6 has: 7 (a) Five years or more of service, at age sixty-five or thereafter. 8 (b) Twenty years of service credit at age fifty-five, exclusive of military 9 service and unused annual and sick leave, but any person retiring under this 10 Subparagraph shall have his defined benefit, inclusive of military service credit and 11 allowable unused annual and sick leave, actuarially reduced from the earliest age that 12 he would normally become eligible for a regular retirement benefit under 13 Subparagraph (a) of this Paragraph. 14 (2) A member of the State Police Retirement System or a hazardous duty 15 member shall be eligible for retirement if he has: 16 (a) Twelve years or more of service, at age fifty-seven or thereafter. 17 (b) Twenty years of service credit at any age, exclusive of military service 18 and unused annual and sick leave, but any person retiring under this Subparagraph 19 shall have his defined benefit, inclusive of military service credit and allowable 20 unused annual and sick leave, actuarially reduced from the earliest age that he would 21 normally become eligible for a regular retirement benefit under Subparagraph (a) of 22 this Paragraph. 23 §1399.8. Disability and death benefits 24 A.(1) The defined benefit plan disability and death benefits shall be as 25 otherwise determined and provided in Tier 1; however, the accrual rate used to 26 calculate any such benefits shall not exceed the member's accrual rate in the hybrid 27 plan. 28 (2) If the hybrid plan member has not met the eligibility requirements for 29 survivors' benefits in the applicable Tier 1 plan, the system shall give his designated Page 23 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 beneficiary or his estate the option to receive the portion of the account balance the 2 member would otherwise have been entitled to as a lump-sum payment; a trustee-to- 3 trustee, single-sum transfer between qualified plans; or a payment made directly to 4 an individual retirement account. 5 B. A member receiving disability benefits based on defined benefit plan 6 provisions shall be entitled access to his defined contribution account as provided in 7 R.S. 11:1399.6(C), including interest on contributions as provided in R.S. 8 11:1399.6(D). 9 C. If distributed as death benefits, a deceased member's defined contribution 10 account shall be divided as follows: 11 (1) If there is a surviving spouse and no minor children, the spouse shall 12 have the same options with respect to the account balance that the member would 13 have had. 14 (2) If there is a surviving spouse and at least one minor child or child with 15 a disability, the surviving spouse shall receive an annuity based on one-half of the 16 account balance and the other half of the account balance shall be divided on a pro 17 rata basis between the remaining minor children and children with a disability and 18 annuitized. 19 (3) If there is no surviving spouse but there is at least one minor child or 20 child with a disability, the account shall be divided on a pro rata basis between the 21 minor children and children with a disability and annuitized. 22 D. If any disability retiree of the hybrid retirement plan who is under his 23 normal retirement age is restored to active service, his defined benefit retirement 24 allowance and ability to access his defined contribution account shall cease, he shall 25 again become a member of the retirement system, and he shall contribute thereafter 26 at the current rate in effect at the time he is restored to service, and if he contributes 27 for at least three years after restoration to active service, the period of time on 28 disability shall be counted as accredited service for purposes of establishing 29 retirement eligibility in the defined benefit portion of the plan, but not for Page 24 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 computation of benefits. Any prior service certificate on which his service was 2 computed at the time of his retirement shall be restored to full force and effect and, 3 in addition, upon his subsequent retirement he shall be credited with all his service 4 as a member. The remaining value of any annuity paid to the rehabilitated member 5 from his defined contribution account balance shall be converted back to a lump sum 6 and deposited into the member's defined contribution account. Contributions to the 7 defined contribution account shall resume and be added to the balance in the account 8 at the time of restoration to active service. 9 §1399.9. Cost-of-living adjustments on defined benefit 10 A.(1) Each qualifying retiree and beneficiary of a hybrid plan member shall 11 have the defined benefit portion of his benefit increased permanently on July first in 12 each odd-numbered calendar year. The amount of the increase shall be the lesser of: 13 (a) Two percent of the benefit amount. 14 (b) An amount equal to the consumer price index for all urban consumers for 15 the South as calculated by the United States Department of Labor, Bureau of Labor 16 Statistics, for the twelve-month period ending on the May thirtieth immediately 17 preceding the payment of the benefit increase. 18 (2) To be eligible for the permanent benefit increases provided in this 19 Subsection, a retiree: 20 (a) Shall have been separated from employment and receiving a benefit for 21 at least one year. 22 (b) Shall have attained his normal retirement age. 23 (3) A nonretiree survivor or beneficiary shall be eligible for the permanent 24 benefit increases provided in this Section: 25 (a) If the benefits have been received by the retiree or the beneficiary or both 26 combined for at least one year. 27 (b) If the retiree would have attained age sixty-five. 28 (4) The provisions of Subparagraph (3)(b) of this Subsection shall not apply 29 to any person who receives benefits based on the death of a disability retiree. Page 25 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 1 B. Each permanent benefit increase provided pursuant to this Section shall 2 be payable based on the amount, not to exceed fifty thousand dollars, of the 3 recipient's annual benefit. 4 C. Each time the system actuary performs an experience study, he shall also 5 evaluate whether and to what extent contributions required to fund the benefits 6 provided for in this Section meet or exceed such liabilities. This assessment shall be 7 based on stochastic modeling. 8 §1399.10. Commingling of assets and accounting 9 Assets of the hybrid plan shall be commingled with assets of the other system 10 plans for investment purposes. Assets of this plan shall be available to fund benefits 11 of all plans within the system, including this plan. A fictitious account for this tier 12 of benefits shall be established for the purposes of accounting for assets and 13 liabilities of this plan and determining funding requirements of this plan. 14 §1399.11. Applicability 15 The provisions of the applicable Tier 1 system or plan shall apply to the 16 hybrid plan for any matter on which this Chapter is silent. In case of any conflict 17 between the provisions of Tier 1 and the hybrid plan, the hybrid plan shall prevail. 18 Section 2. The cost of this Act, if any, shall be funded with additional employer 19contributions in compliance with Article X, Section 29(F) of the Constitution of Louisiana. 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 28 Original 2019 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, 2020. Present law establishes four 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 defined benefit pension and a defined contribution (DC) account – for members of each system Page 26 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 whose first employment making them eligible for membership in a state system occurs on or after July 1, 2020 (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. 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)2%. (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 30th 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 a COLA: (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 Page 27 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 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 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 of LASERS 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 DC 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. 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 choose 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 Page 28 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 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 Haz. 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, 2020 (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. 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. Page 29 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions. HLS 19RS-307 ORIGINAL HB NO. 28 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 Tier 1 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. (Amends R.S. 11:62(4), (5), (10), and (11), 102(B)(1) and (3)(a), (C)(2)(a) and (b), (3)(a), (h), (j), (k), and (m), (6)(a), (b)(i), (c), and (d), (D)(2)(a) and (b), (3), (4), (5), and (6)(a), (b), and (c), (E)(1), and (F)(1), 247(A)(1), (D), and (E), 542(C), 883.1(C), 927(A) and (B)(2)(a) and (b) and (3)(a)(i), 1145.1(B), 1332(B) and (F); Adds R.S. 11:62(4.1), (5.1), (10.1), and (11.1), 102(C)(3)(n), 102.7, and 1399.1-1399.11) Page 30 of 30 CODING: Words in struck through type are deletions from existing law; words underscored are additions.