Louisiana AFL-CIO president Louis Reine, left, talks with Sen. Elbert Guillory, D-Opelousas, right, as Tom Tate, Louisiana Association of Educators director of government relations looks on Monday. Guillory had three retirement bills in front of the committee. (Associated Press)
Last Modified: Wednesday, May 09, 2012 4:38 PM
BATON ROUGE — Three of the four major bills in Gov. Bobby Jindal’s retirement reform package have undergone extensive revisions, and the 67 retirement age is no longer included.
Sen. Elbert Guillory, D-Opelousas, is chairman of the Senate Retirement Committee and sponsor of the three rewritten measures, which were approved Monday by the Senate Finance Committee. They next head for debate in the full Senate.
Jindal said the reforms are necessary to cope with the debt of the state’s major retirement systems — nearly $19 billion. That debt, called the unfunded accrued liability, is the money it would take to fully fund retirement obligations.
Retirement officials still oppose the changes, insisting they are unconstitutional and break a contract made with state workers when they were hired. Lawsuits are expected if the legislation is eventually approved.
“That’s the single scariest thing about this legislation. It’s changing the rules,” a state employee told the finance committee.
The pending legislation affects members of the Louisiana State Employees Retirement System and higher education members of the Teachers Retirement System of Louisiana. Pre-K through 12 teachers, hazardous-duty personnel and judges are not included in the changes.
Senate Bill 749 would set various retirement ages, depending on the employees’ years of service. It wouldn’t apply to anyone who is at least 55 years of age on June 30, 2013, or to anyone who has at least 20 years of service credit on June 30, 2013. Workers could retire at any age with 30 years of service.
The retirement age would be 55 if the worker has at least 15 but fewer than 20 years of service on June 30, 2013. It would be 57 for those who have 10-15 years’ service. People could retire at 60 if they have between five and 10 years’ service. The retirement age would be 65 for workers with fewer than five years of service.
The bill, if approved, would take effect July 1, 2013.
S.B. 52 would increase employee contributions in those same two retirement systems by 2 percent in four stages of 0.5 percent each year over four years. The current contribution rate is either 7.5 percent or 8 percent, depending on when the worker was hired.
The legislation also provides that the additional funds will be applied to pay down the state’s unfunded accrued liability. An earlier version had the extra money going into the state’s general fund.
S.B. 47 would change the way pensions are computed from a three-year to a five-year annual salary. The change will be phased in on a monthly basis over a two-year period.
Pensions are computed by multiplying the years of service times the individual’s accrual rate times his final average compensation.
Anyone retiring on or before June 30, 2013, would still have his pension based on the three-year salary average. Workers who retire on or after July 1, 2015, would have their pensions computed with the five-year average.
Creation of a cash balance retirement plan for new employees, the fourth major bill in the reform package, has passed the House and is awaiting action in the Senate.
Employees and the state would contribute to the plan, and workers would have access to a lump-sum payment when they retire. The funds would be invested, and employees would never lose funds when there are investment losses.