Proposed legislation that would change the defined benefit plan to a 401-K-type defined contribution benefit won’t affect those already in the state’s retirement system—or will it?
The Louisiana State Employees’ Retirement System North Shore chapter of the Retired State Employees Association got an earful Monday from executive director Cindy Rougeou and State Rep.
John Bell Edwards on the proposed legislation that would change the way those entering state employment would have their retirement money invested and a separate move to consolidate all the state employee’s various retirement systems into one.
Edwards cautioned the attendees, numbering about 100, to “be on guard to changes to the system you rely upon. These changes will be to your detriment if passed. A consolidation of all the systems will not save the state money and I will definitely not support this bill.”
The change from a defined benefit plan to a defined contribution plan has not worked in other states and transfers the risk of the investments of retirements funds from the state to the employee.
In fact, Rougeou said it may well cost the state more money if the retirement system fails and retirees have to go on public assistance. There is also a chance retirees would outlive their contribution benefit that would partly be based on actuary tables of average life spans.