Tuesday, December 8, 2009

Streamlining Commission Endorses Defined Contribution Plan for New Employees by Robyn Ekings

The Commission on Streamlining Government today voted to endorse a plan that would require new employees of Louisiana's four largest public employee retirement systems to enter a defined contribution retirement plan instead of the current defined benefit plan. The issue has been the subject of a study requested by House Speaker Jim Tucker. Supporters cite a multi billion dollar accrued debt for the systems as one reason to make the shift to a defined contribution plan.

"I happen to think that for all future employees, the advantages outweight the disadvantages." said State Treasurer John Kennedy, "It also eliminates the political tisk of the legislature adding benefits without funding them." Retirement system officials have pointed out that the move will not reduce the current debt of the systems, and have asked state leaders to set aside money that will pay down the debt, which has increased in large part because enough money was not set aside in the systems' early years to fund promised benefits.

The defined benefit plan provides a guaranteed lifetime payment for workers who have contributed to the system.

The Streamlining Commission approved the recommendation without comment in a 9-1 vote.

The recommendations of the panel will be used by lawmakers in the spring to craft a state budget.

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