New law to support state retirees, save billions - KNOE 8 News; KNOE-TV; KNOE.com |

New law to support state retirees, save billions

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BATON ROUGE, La. (KNOE 8 News) – Sunday, Governor Jindal held a bill signing ceremony where he signed cost of living adjustment (COLA) legislation into law to better support state retirees. The bills will also reduce the UAL and help pay it off faster for taxpayers, saving billions of dollars over the next thirty years.

At the ceremony, the Governor officially signed HB1225 by Representative Joel Robideaux, which reforms how COLAs are allocated to ensure the systems’ long term financial stability. He ceremonially signed SB 16, SB 18, SB 19, and SB 21 by Senator Elbert Guillory, which grants COLAs to retirees in all four state retirement systems and had already previously been signed into law. Because of these bills, more money will go to paying off the UAL. It will be paid off sooner, which will save the state billions of dollars over the next 30 years and will make the systems more financially stable.

All of these bills were tied together so that if one did not pass, the others would not be enacted into law. This ensured financial stability for the future of the retirement plans for state workers and future retirees. The COLA bills that were signed into law apply to Louisiana State Police Retirement System, Louisiana State Employees’ Retirement System, Louisiana School Employees’ Retirement System and the Teachers’ Retirement System of Louisiana.

Governor Jindal said, “Our state retirees worked long and hard throughout their lives to ensure a great retirement, and we want to make sure the system remains sustainable and strong for the current state employees who work hard on behalf of Louisianians every day. This legislation is a fiscally responsible way to give retirees a COLA and to reform the systems to make them financially stable for future retirees.”

LASERS Executive Director Cindy Rougeou said, “This legislation ensures a much needed COLA for our retirees coupled with billions of dollars in expected savings for our system. This is significant pension reform. On behalf of LASERS I want to thank Representative Robideaux and Senator Guillory who authored the bill and Governor Jindal for making it official.”

TRSL Executive Director Maureen Westguard said, “On behalf of TRSL, we would like to thank Representative Robideaux and Senator Guillory, as well as Governor Jindal for signing this legislation. These are key bills that will continue to provide COLAS for retirees while at the same time providing them a sustainable system. We welcomed the opportunity to work with all involved on this key legislation.”

Louisiana State Police Retirement System Chairman Frank Besson said, “The Louisiana State Police Retirement System is thrilled to be able to grant a COLA to its retirees who dedicated most of their lives to public service for the citizens of Louisiana. This is the first COLA provided in six years, and we are grateful to the Legislators and the Governor who assisted us in this process. We are especially grateful for Senator Elbert Guillory and his staff for their help in drafting and sponsoring the legislation."

HB1225
This bill provides that future COLAs will be tied to the funded ratio of the respective retirement system and that any additional dollars left in each system’s respective experience account after a COLA is granted will be used to pay down the system’s Unfunded Accrued Liability (UAL) to ensure sustainability and pay off system debts sooner. The funded ratio compares system assets to liabilities.

This means that a system has to be more financially stable to pay off the benefits it has already granted before it can grant additional benefits—such as a COLA—on top of benefits provided today. By allocating additional dollars to the UAL, this also will reduce the annual burden on employers’ contributions to fully fund the system, which, for example, helps school boards ensure they can continue to fully fund benefits for retired teachers. LASERs’ employer contributions will go down by $1.8 billion over 30 years and TRSL’s employer contributions will go down by $3 billion over 30 years. It also reduces the portion of the benefit against which the COLA is calculated to $60,000 to ensure equity in the amount granted. COLAs will be granted as follows:

• If a system is funded at 80% or more, the personal benefit increase PBI will be the lesser of the CPI-U or 3%.
• If the system is funded at 75-80%, the PBI will be the lesser of the CPI-U or 2.5%.
• If the system is funded between 65-75%, the PBI will be the lesser of the CPI-U or 2.0%.
• If the system is funded between 55-65%, the PBI will be the lesser of the CPI-U or 1.5%.
• If the system is funded at less than 55%, no PBI will be granted.

The allocation of investment gains not transferred to the experience accounts will be used to pay off the systems’ debts sooner than under current law. The amortization bases for each system’s oldest debt will not be re-amortized.

Representative Robideaux said, “Rarely are we able to manage the process to accomplish multiple victories. Today we save the state billions of dollars and give retirees a much needed and deserved cost of living increase.”

SB 16, 18, 19, 21
These bills grant COLAs for the four state retirement systems. Present law allows the retirement systems to provide a permanent benefit increase to retirees or beneficiaries who have received a benefit for at least one year and are at least 60 years old upon legislative approval if there are sufficient funds in the system’s experience account. A beneficiary may receive a PBI if the deceased member or beneficiary or both combined have received benefits for at least one year and the deceased member would have be at least 60 years old had he lived.

Each bill provides for a 1.5% PBI on the portion of such retirees’ or beneficiaries’ benefits that are less than certain amounts ($93,000- $96,000). This represents a roughly $350 average annual benefit increase to state employees, including state police, teachers, non-teaching school staff such as bus drivers, and state workers. SB16 grants a COLA for state police, SB18 grants a COLA for LASERS, SB19 grants a COLA for LSERS, and SB21 grants a COLA for TRSL.

Sen. Guillory said, “The message that we send to Louisiana today is that we care. We care about the retirees who have given their lives of service to the State of Louisiana and whose pensions have been chipped away by time and inflation. Today we do something about that. Today we also show that we care about the taxpayers who labor. It is a great moment in Louisiana history and I am proud to be a part of it.”

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