Friday, March 5, 2010

Officials urge retirees to fight possible change to pension benefits

Major changes to benefits for retired state employees would be a "disaster," a top official with the Retired State Employees Association said Thursday.

"It will be a disaster for our retirement system," said Allen Reynolds, executive director of RSEA, at a meeting of the Alexandria chapter at the Main Street Community Center in Pineville. "We have to fight this as an organization, because there is a lot of support for it in the Legislature."

Under the current, defined benefit system, state employees are given regular, guaranteed benefits after retirement, based on their years of service.

Under a defined contribution system, employees would pay into a retirement account, similar to the way many people pay into a 401(k). They would be responsible for planning and managing their account, and would be guaranteed benefits after retirement only until their account balance runs out.

"What we're doing is working," said Cindy Rougeou, executive director of Louisiana State Employees' Retirement System. "Frankly, it isn't broken and doesn't need fixing."

Reynolds and Rougeou point out the state still is responsible for the current unfunded accrued liability, regardless of whether it changes retirement plans, though moving to a defined contribution system would protect the state from accruing more.

1 comment:

Rebblount said...

What will happen to our health insurance coverage if this plan is used? How will the plan get the payments from the retirees?