Provides relative to optional retirement plans for members of the Louisiana State Employees' Retirement System (OR INCREASE APV)
The introduction of this hybrid retirement plan is expected to have several fiscal implications. The actuarial note associated with the bill indicates potential increases in employer contributions as a result of the new plan. However, due to the optional nature of the program, there is concern over anti-selection risk, where only those employees who anticipate significant benefits may choose the new hybrid option, possibly leading to higher costs over time. Overall, while the hybrid plan is designed to provide flexible retirement options, its long-term financial impact on LASERS remains to be fully understood, particularly in terms of unfunded accrued liabilities.
House Bill 31 aims to introduce an optional hybrid retirement plan for new employees eligible for membership in the Louisiana State Employees' Retirement System (LASERS) on or after July 1, 2021. This hybrid plan combines elements of a defined benefit (DB) plan and a defined contribution (DC) plan. Notably, it proposes to share contribution requirements equally between employers and employees and aims to provide retirement benefits that are more tailored to the unique circumstances and career paths of new state employees, particularly younger and shorter-term employees. The bill specifies adjustments to contributions and benefits aimed at maintaining fiscal stability while enhancing overall retirement security.
The sentiment surrounding HB 31 appears to be mixed among legislators and stakeholders. Proponents of the bill advocate for the increased flexibility and potential cost-savings of the new hybrid plan, viewing it as a means of modernizing the retirement system. However, opponents express concerns about the potential for increased costs due to the optional nature of the plan and the risks associated with employee selection of retirement options. These conflicting views highlight the ongoing debate regarding the best approach to structuring retirement benefits for state employees.
The key points of contention regarding HB 31 include the potential impact of the anti-selection risk on the financial health of LASERS, as well as concerns about how the new hybrid plan may affect the balance of benefits for future employees compared to those currently in the system. Detractors argue that the hybrid plan could lead to inequities in benefits, particularly disadvantaging older employees or those who stay in the system longer. Furthermore, as fiscal implications unfold, the legislature may face difficult decisions regarding contributions and potential adjustments to the plan's structure to ensure sustainability.