Last Modified: Sunday, May 20, 2012 8:45 PM
Gov. Bobby Jindal’s push to create a new, 401(k)-style retirement plan for future rank-and-file state workers is nearing final legislative passage, having received support from both the House and the Senate.
The proposal (House Bill 61) by Rep. Kevin Pearson, R-Slidell, would create a cheaper investment account similar to a 401(k) plan for state employees hired after July 1, 2013, instead of a monthly retirement payment based on their salaries and years of employment.
The Senate voted 23-11 for the measure, which heads back to the House for approval of Senate changes.
Supporters said the new system would help shrink the growth in the costs of pension programs.
Critics said the new plan, called a “cash balance” plan, could leave Louisiana state employees without enough of a safety net since they aren’t part of the Social Security system.
Financial analysts differ significantly on whether the retirement plan change for new employees would cost or save the state money, with the analyst for the Legislature saying the change could cost the state and the analyst hired by the Jindal administration suggesting multimillion dollar savings.
Under the proposed system, the contributions made by the employee and the state would be invested, and the account would grow at the rate of investment earnings. The employee would be guaranteed to never lose money for investment slumps.
When employees leave their state jobs, they would get a lump sum payment of their account balance, including interest and credits for the investment earnings, or they could get an annuity, a fixed annual payment for life once they reach age 60.
Southwest Louisiana lawmakers who voted for the bill were Dan “Blade” Morrish, R-Jennings, Eric LaFleur, D-Ville Platte, and John Smith, R-Leesville.
Sen. Ronnie Johns, R-Lake Charles, was absent and did not cast a vote.
Posted By: for real On: 5/21/2012
Welfare is their new safet net.