State retirement officials will begin studying on Monday the possibility of changing the state’s public retirement system to a plan that no longer guarantees lifelong benefits for state employees.
Currently, state employees and teachers participate in plans that the government guarantees to provide lifelong benefits based on years of service and salary, called defined-benefit plans.
A meeting of the state House and Senate Retirement committees will be looking at defined-contribution plans, which are similar to 401(k)s and require employees to manage their own investments. Employees retire with what they and their employer contribute to the system, along with investment earnings or losses.
“I don’t see a vote being taken. But I do think we will get a good summary of the pros and cons on the two types of plans,” said House Retirement Committee Chairman Joel Robideaux, No Party-Lafayette.
Officials with the two largest Louisiana systems, which hold the plans for teachers and state employees, defend the defined benefit plan.
“The issue on a defined contribution plan is, where are you at, at the time you have to retire?” said Maureen Westgard, director of the Teachers Retirement System of Louisiana.
Cindy Rougeou, director of the Louisiana State Employees Retirement System, said the debate could be confused by the retirement systems’ debt carried over from years past.
That debt, which the state is now making payments toward, was the result of legislators who decided not to pay the money due to the system for retiree benefits, Rougeou said.
“A defined contribution plan will do nothing in terms of debt,” she said.