Provides relative to the actuarial liabilities of state retirement systems (OR DECREASE APV)
Impact
The provisions of HB 57 indicate that retirement benefits paid in the future will be lower, directly affecting employee contributions, which are expected to increase. Additionally, the employer contributions required by the state retirement systems will experience a reduction starting in 2032. This bill indicates a long-term strategy aimed at reducing unfunded accrued liabilities across different retirement systems, ultimately saving significant costs for the state government over the next two decades. However, these proposed changes raise concerns over fairness and adequacy of retirement benefits for state employees.
Summary
House Bill 57 aims to address the actuarial liabilities of state retirement systems in Louisiana. The bill proposes changes to how retirement benefits are calculated, specifically regarding the final average compensation (FAC) and anti-spiking provisions. It introduces mandatory special New UAL employee contributions for individuals in various state retirement systems beginning July 1, 2015, with the rate increasing two years later. These adjustments are set to help mitigate unfunded liabilities in multiple retirement systems, signaling a proactive approach to stabilize the financial health of state-sponsored retirement plans.
Sentiment
The sentiment surrounding HB 57 reflects a mixture of support for its financial pragmatism and criticism regarding its impact on employee benefits. Proponents argue that the changes are necessary to ensure the viability of the state retirement systems in light of growing unfunded liabilities. Conversely, opponents express concerns that reducing the benefits will jeopardize the financial security of retiring employees, leading to a potential reduction in the quality of life for state retirees. This division highlights broader tensions in public policy regarding pension reform amid fiscal constraints.
Contention
Contention revolves around the potential effects of implementing HB 57 on public employee benefits. Critics point out that the reduction in retirement benefits and the associated increase in employee contributions could disproportionately affect those relying heavily on their retirement income. Additionally, legal challenges to the constitutionality of the bill may arise, focusing on the protection of public pension benefits under both Louisiana and federal law. Such challenges could delay or inhibit the bill's intended goals, complicating efforts to address state fiscal health while preserving commitments made to employees.
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)
Provides for application of a portion of state retirement system investment returns to system debt and increases the threshold that must be met prior to funding state retirement system experience accounts (OR DECREASE APV)
Relative to the La. State Employees' Retirement System, requires employers to remit to the system individualized employer contributions (EN NO ACTUARIAL COST APV)
Requires any employer who exits the Parochial Employees' Retirement System of Louisiana to pay its portion of the liabilities. (7/1/10) (EN SEE ACTUARIAL NOTE APV)
Establishes a minimum employer contribution rate for the Optional Retirement Plan in the Teachers' Retirement System of Louisiana (EN INCREASE FC SG LF EX)
Provides for a defined contribution plan for persons employed by state agencies and institutions after December 31, 2012, in nonhazardous postions. (7/1/12) (OR +$42,000,000 FC GF EX)
Provides relative to the optional retirement plan and defined benefit plan for the Teachers' Retirement System of Louisiana (EN SEE ACTUARIAL NOTE APV)
Relative to the La. State Employees' Retirement System, requires employers to remit to the system individualized employer contributions (EN NO ACTUARIAL COST APV)