Monday, May 16, 2011

Bill to Create Second Tier Option for Retirement Systems Voluntarily Deferred-by-Robyn Ekings

A proposal to allow employers the option to require employees to participate in a second level of benefits was voluntarily deferred today in the Senate Retirement committee by Senate Bill 12's author, Morgan City Senator Butch Gautreaux. Gautreaux told a hearing room full of concerned retirement system representatives that he asked for the bill to be crafted in an effort to provide employing agencies with a less expensive defined benefit plan. Among other details, the proposal would have eliminated the Deferred Option Retirement Plan (DROP) for Tier 2 members.

The board of the Louisiana State Employees’ Retirement System (LASERS) noted several problems with the plan as drafted, and voted to defer taking a position in order to gather information from tax counsel, and work with the author. Senator Gautreaux admitted that the measure had flaws, adding that his goal was to save the defined benefit plans saying “we’ve got to find a way to make this work for the next generation”. Gautreaux urged retirement system officials to join forces to find “common ground that’s affordable to the employer too.”

Public system representatives who testified pointed to a series of issues with the plan, including the potential to discourage potential recruits attracted to public service by benefits that make up for salaries that are on the average lower than in the private sector.

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