An expert in public employee retirement systems told legislators today that changing the way the state operates public pension plans will discourage public service in some of the most critical areas of Louisiana government.
The comments came during a joint meeting in Baton Rouge of the House and Senate Committees on Retirement. The panel is reviewing a study resolution by House Speaker Jim Tucker, which seeks to find out if the state should establish a defined contribution plan, in place of the current defined benefit plan, for all new employees hired on or after July 1, 2010.
The defined benefit plan constitutionally guarantees lifelong benefits for state employees. Benefits are managed by the retirement systems. Defined contribution plans generally require employees to manage their own investments, and supporters say they are a more cost effective way for the state to offer retirement benefits.
“As the primary form of retirement for those who build our roads, keep us safe, and teach our kids, it’s not the way to go.” Attorney Robert Klausner told committee members, “Nearly every state that’s gone to a mandatory defined contribution plan has come back.” Klausner added that several of the states that shifted from a defined benefit plan, like Alaska, West Virginia, and Nebraska, faced serious challenges recruiting law enforcement workers and teachers.
At the opening of the hearing, Speaker Tucker asked legislators to have “a candid discussion” about the issue, adding “we’re not trying to throw anyone from the train.” Tucker says he is worried that the combined debt of the retirement systems will be even more difficult for the state to shoulder in coming years.
Cindy Rougeou, Executive Director of the Louisiana State Employees Retirement System (LASERS) points out that state workers who are in the defined benefit plan do not receive social security, adding that “the protections contained in the benefit are especially important in a volatile economy. What we don’t want is a generation of seniors who are forced to rely on public assistance.”