State Employee Retirement Age Proposal Could See Some Changes

By Marsha Shuler
Capitol News Bureau
March 24, 2012
Gov. Bobby Jindal’s proposals to raise state employee retirement age to 67 could be undergoing a major revamp, the chairman of the state Senate Retirement Committee said Friday.

“There is considerable movement toward a modified version of the age 67 bill,” Senate Retirement Committee Chairman Elbert Guillory, D-Opelousas, said.

Guillory said being discussed is implementing the age 67 requirement in a graduated way depending on years of employment. The more years a state employee has been on the job, the less the age would increase under the plan, he said.

“There’s a lot of movement for something along those lines,” he said. Guillory did not detail exact age to years of service changes being discussed.

“There’s a need for state employees to understand that we understand,” Guillory said. “We get it. A lot of people have made a lot of (retirement) plans. … We don’t want to dash all those plans.

Guillory said the conversion should be done in a way that’s “least onerous.”

The Louisiana State Employees Retirement System and the Teachers Retirement System of Louisiana have voted to oppose the age 67 legislation, arguing it is unconstitutional and unfair. The systems contend, among other things, it violates an employment contract between the employee and the state.

The retirement plans of nearly 50,000 state employees would be adversely affected by Jindal’s age 67 proposal, including about 40,000 of the 54,000 active members of LASERS as well as another 8,500 members of TRSL who work in higher education.

The retirement age bill is part of Jindal’s legislative package that would make employees work longer, pay more and get reduced pension benefits.

Jindal said he wanted to get a handle on escalating state pension system costs that he said were eroding the state’s ability to invest dollars in education and health care. He also said he wanted a system that provides a sustainable benefit for employees.

LASERS’ unfunded accrued liability is $6.45 billion — much of it attributable to promises made decades ago by past governors and Legislatures that went unfunded. The unfunded liability is the total amount by which the retirement system’s benefit obligations exceed the assets of the system.

State voters passed a constitutional amendment requiring the state to pay off that old debt by 2029. State payments to eradicate it are mushrooming because of a back-loaded schedule also adopted by prior administrations.

A LASERS analysis of the Jindal legislation showed that pension checks for some affected employees could be reduced about 50 percent.

Under the Jindal-pushed legislation, the retirement age would increase to 67 for certain public employees. He exempts those who are age 55 by a certain date as well as employees in hazardous-duty positions. Jindal said those in hazardous-duty positions need protection because of the nature of the jobs they do.

Another feature of the legislation would allow employees to retire up to October without any change in benefits as a result of the 67 requirement.

LASERS executive director Cindy Rougeou earlier predicted that, if passed, the change would result in a raft of retirements prior to the October cutoff date.

Guillory said the state cannot afford to have a large part of its workforce retire right now.

“Such a mass exodus would be detrimental to the state,” he said.