Friday, March 27, 2015

LASERS Board Takes Positions on Prefiled Retirement Bills

The LASERS Board of Trustees met on March 26 and voted to take positions on eight prefiled retirement bills that would directly impact LASERS if passed.

Trustees voted to support HB 42 by Representative Sam Jones to authorize a Cost-of-Living Adjustment (COLA) of up to 1.5 percent for LASERS retirees and beneficiaries. This COLA would be funded through the LASERS Experience Account which currently has a balance of $117 million.

Trustees also supported SB 16 by Senator Elbert Guillory which would clarify provisions created in Act 399 of 2014 regarding excess investment earnings, employer contributions, and Cost-of-Living Adjustments (COLAs).

Several measures were supported by the Board insofar as they would reduce system debt:

  • HB 33 by Representative Berthelot would increase litter fines and distribute 50 percent of the fines to the retirement system of the law enforcement agency issuing the litter citation.
  • HB 55 by Representative Ritchie and SB 15 by Senator Nevers are identical measures that call for a Constitutional Amendment that would levy a tax on the use of hydrocarbon processing facilities and dedicate a portion of the tax proceeds to payment of the Initial Unfunded Accrued Liability (IUAL) of LASERS. 
Trustees voted to take a neutral position on the following bills:

  • HB 45 by Representative Pearson provides that membership is optional for persons age sixty-two or older at the time of employment, consistent with the age sixty-two retirement eligibility for new hires after July 1, 2015.
  • HB 46 by Representative Reynolds provides relative to benefits for minor children of certain wildlife agents in the enforcement division of the Department of Wildlife and Fisheries.
  • SB 14 by Senator Guillory includes non-investment related administrative expenses in calculating the required employer contribution rate.
The positions taken are based on the initial language of the legislation. For more information, visit the LASERS website.

The 2015 Legislative Session convenes April 13 and ends June 11. Progress on these proposed retirement bills will be tracked and updated on the LASERS website frequently. Check back often for updates.

Tuesday, March 10, 2015

LASERS Benefits Louisiana, New Facts Available

Two new LASERS informational pieces have been created to demonstrate how LASERS Benefits Louisiana.

The LASERS Infographic is a visual representation, showing the positive difference LASERS is making in Louisiana's economy, the cost-effectiveness of the System, and how we are implementing money-saving reforms.

The LASERS Fact Sheet gives a brief synopsis of the System's assets, returns, rankings, membership numbers, and more in an easy-to-read format.

LASERS Benefits Louisiana by providing over $1 billion in annual benefits to retirees and their beneficiaries. View the infographic and read the facts for a snapshot of LASERS economic impact on Louisiana.

Thursday, February 5, 2015

The Facts about Retirement Changes

The following guest commentary by LASERS Executive Director Cindy Rougeou is in response to Jim Beam's column in the Lake Charles American Press on February 1.

The Facts about Retirement Changes

Several recent reports, containing inaccurate data, are challenging the sustainability of public retirement systems nationally and in Louisiana. By failing to note the multi-billion dollar pension reforms that have been enacted by our Legislature over the past 10 years, these reports do a great disservice.

It is important to recognize the work of the Louisiana Legislature over the past decade in adopting significant pension reforms that are expected to save LASERS nearly $3 billion; thereby reducing taxpayer costs while significantly improving LASERS sustainability.  It is surprising that the passage and immense impact of these reforms seem to be the best kept secret in our state. Those reforms enabled the LASERS Board of Trustees to approve and recommend additional reforms to our cost method and actuarially assumed rate of return that will provide greater budget stability going forward.

We reduced our actuarially assumed rate of return to 7.75 percent, a more fiscally responsible expectation.  Changing our cost method did result in a one-time increase in the unfunded accrued liability (UAL) but that cost was almost entirely offset by the decrease in the cost of the accruing benefit. The employer contribution to LASERS consists of the debt payment and the employer cost of the accruing benefit. For purposes of comparison, a private employer pays 6.2 percent to Social Security for the cost of the accruing benefit; next year the State will be paying 3.54 percent for the cost of the LASERS accruing benefit. And as you may recall, our members do not participate in Social Security.

It is the initial unfunded accrued liability (IUAL), not the total UAL that must be paid off by the year 2029. We are on track for this pay-off to occur; and with recent legislative changes, this pay-off may occur earlier than 2029.

Because of the 2014 reforms, the State will be paying LASERS $63 million less next year than was paid the year before and the employer contribution rate will be reduced. I am also proud that LASERS Benefits Louisiana by generating $1.27 billion in state economic activity. Louisiana has actually been on the leading edge of pension reform.  To say that nothing is being done, could not be further from the truth.