Changes the actuarial valuation method to entry age normal. (6/30/12) (OR NO IMPACT APV)
This legislation is designed to create a more stable and predictable financial environment for the TRSL by establishing a different framework for calculating required employer contributions. With the new method, it also stipulates that the employer contribution rate will be increased by an additional 0.7%. The additional revenue generated from this increase is intended for reducing the unfunded accrued liability (UAL) of the system, which directly impacts pension security for teachers. By implementing this change, the bill aims to enhance the actuarial soundness of the TRSL.
Senate Bill 32, introduced by Senator Guillory, aims to modify the actuarial valuation method used by the Teachers' Retirement System of Louisiana (TRSL). The bill proposes a shift from the previously utilized projected unit credit method to the entry age normal method for the valuation of contributions and liabilities. Such a change is significant in ensuring that the system's financial structure is sustainable and aligned with contemporary actuary practices for retirement funding, addressing outstanding liabilities effectively.
The overall sentiment surrounding SB32 seems to be cautiously optimistic among proponents who view it as a necessary step toward improving the funding and fiscal health of the TRSL. However, there may be concerns regarding the impact of increased contribution requirements on school districts and their budgets, which could generate pushback from local entities. Discussions are likely to reflect anxiety about short-term fiscal impacts juxtaposed with long-term benefits of a healthier pension fund.
Notable points of contention may arise primarily from the stakeholders involved, particularly from employers who are responsible for the increased contribution rates. Some school districts may argue against the additional fiscal burden that the bill imposes, raising questions over the feasibility of sustaining higher contributions amidst other financial pressures. Furthermore, there may be debates on whether the entry age normal method adequately addresses the financial needs of the pension system without imposing excessive costs on local employers.