By Marsha Shuler
Capitol news bureau
June 06, 2012
The Louisiana State Employees Retirement System asked Gov. Bobby Jindal to veto legislation that would require forgiveness of certain debts owed a pension system.
Connie Carlton, board chairman at Louisiana State Employees Retirement System, or LASERS, wrote that the legislation “creates a very troubling precedent” that flies in the face of the Louisiana Constitution because it would require the “donation of funds.”
The Governor’s Office will review the measure shortly, spokesman Kyle Plotkin said.
The legislation is House Bill 38 sponsored by state Rep. Sam Jones, D-Franklin.
HB38 would require retirement systems to notify each other if a rehired retiree has a reciprocal agreement to ensure benefits are discontinued. Under state law, members are not eligible to receive benefits from any system as long as they are contributing to another system.
Carlton said LASERS is not concerned about that requirement. But another section of the bill would require forgiveness of a debt owed by certain retired members of the Municipal Employees’ Retirement System, called MERS, who were also members of LASERS.
The legislation would exempt any retired MERS member who paid into that system for at least 15 years and who was a member of LASERS for at least three-and-a-half years and retired under a reciprocal agreement from having to repay “erroneously received” retirement benefits.
“That section sets a precedent, which could have a negative impact on all public retirement systems, and will encourage any member who has received an overpayment for any reason to seek legislation to forgive their debt,” Carlton wrote. “At a time when fiscal soundness of retirement systems is critical, this legislation sets a dangerous precedent.”
On Tuesday, Jones said LASERS’ real problem is the reporting that his legislation requires for all pension systems.
“The current system fails to track them (employees) from one system to another,” Jones said. “I just think they don’t want the responsibility.”
The burden should not be on employees to reimburse systems for overpayments because they were not fully informed, Jones said. The legislation would put employees on full notice of the ramifications of taking a new job covered by a different pension system.
But Cindy Rougeou, LASERS executive director, said HB38 starts to open the door on debt forgiveness with legislators lining up and saying “let’s let them get their money back when we are working so hard to shore up the finances of the system. It requires us to forego money legitimately owed.”