Louisiana Senate Bill SB632

Louisiana 2010 Regular Session

• Introduced: 3/29/10
• Refer: 3/29/10

Caption

Provides a regular schedule for permanent benefit increases for retirees of the state retirement systems. (06/30/10) (OR -$5.1 BILLION APV)

Impact

Significantly, the bill alters how increases to retirement benefits are structured by shifting from a system that previously linked increases to market performance and other economic indicators to a more stable arrangement that assures retirees of regular increments to their benefits. The proposed changes are compulsory for all retirees who have been separated from service for at least one year and who meet the age requirements of 62 or 65 depending on their participation levels in the retirement program, which could lead to improved financial security for a significant number of state retirees.

Summary

Senate Bill 632 establishes a formal schedule for permanent benefit increases for retirees within Louisiana's state retirement systems, including the Louisiana School Employees' Retirement System and the Louisiana State Employees' Retirement System. The bill specifically mandates a 2% benefit increase for eligible retirees in every odd-numbered year starting in 2017, which aims to provide a predictable enhancement to retirement incomes. This legislative measure is intended to bolster the financial stability of retirees by ensuring that their benefits are adjusted periodically, somewhat in line with inflation as indicated by the Consumer Price Index.

Sentiment

Overall sentiment surrounding SB 632 appears to be generally positive among proponents, who argue that the bill provides necessary support to retired state employees and helps to mitigate the risk of benefit erosion due to inflation. However, there are concerns about the sustainability of funding these increases without putting additional financial strain on the state’s retirement systems, given that the additional costs are to be funded through increased employee contributions. This has raised questions regarding the financial burdens on current workers to secure benefits for retirees.

Contention

Notably, a point of contention involves the obligatory increase in employee contributions, set at 2% of pay for active members starting January 1, 2011. Critics argue that this additional cost may deter individuals from public service careers, particularly in an economy that is already challenging for many. Furthermore, the bill repeals certain prior legislative measures relating to benefit calculation, which has led to discussions about whether this reduction in complexity simplifies retirement planning for employees or further complicates it by removing previously established guidelines.