Suspends provisions of law providing for the Cash Balance Plan in certain retirement systems (EN DECREASE FC GF & SG EX)
Impact
The fiscal implications of HCR2 are noteworthy. The suspension of the cash balance plan is projected to result in a decrease of actuarial and fiscal costs. Over the next five years, expenditures from the state General Fund are anticipated to decrease due to reduced normal costs for new members, which translates into less financial pressure on the state's budget. Cost savings are expected from reduced employer contribution requirements as administrative expenses decline, benefitting the overall financial health of the retirement systems involved. This change also means that any normal cost increases typically associated with the cash balance plan will be postponed for one year.
Summary
HCR2 is a House Concurrent Resolution that seeks to suspend the implementation of the cash balance plan for selected Louisiana state retirement systems, specifically LASERS, TRSL, and LSERS, which was originally scheduled to begin on July 1, 2013. The resolution proposes to delay the implementation by one year to July 1, 2014. This postponement is intended to address several unresolved issues surrounding the cash balance plan, some of which may require legal clarifications and rulings from the Internal Revenue Service. Supporters of the delay argue that allowing more time will permit the resolution of these matters prior to full enactment of the plan.
Sentiment
The sentiment surrounding HCR2 appears to be pragmatic, with an emphasis on caution. While there may be differing opinions among stakeholders regarding the future of the cash balance plan, the consensus seems to support the need for more extensive legal and administrative review before implementing significant changes to the retirement systems. By deferring the plan's rollout, legislators can ensure that all necessary considerations are taken into account, potentially fostering a more stable environment for retirement beneficiaries.
Contention
One area of contention pertains to the uncertain legal landscape surrounding the cash balance plan. Stakeholders voiced concerns about the plan's potential long-term costs compared to traditional pensions and what those costs could mean for members of the retirement systems. The legislation's postponement reflects a recognition of the need to navigate these complexities carefully. Implementing the cash balance plan without fully addressing these legal issues could impose unnecessary corrections and financial corrections down the line, ultimately impacting both current members and the financial administration of retirement systems.
Suspends Chapter 7 of Subtitle II of Title 11 of the Louisiana Revised Statutes of 1950, comprised of R.S. 1399.1 through 1399.7. (RE DECREASE FC GF & SG EX)