By Marsha Shuler
Capitol News Bureau
The Louisiana State Employees
Retirement System board voted Friday to endorse legislation that would delay
implementation of a 401(k)-type pension plan for new hires, with a Jindal
administration representative going along.
The board also, with its
administration member objecting, voted to oppose legislation billed as a
measure to fix problems with implementation of the new so-called “cash balance”
LASERS Executive Director Cindy
Rougeou said the legislation fails to address pension system administrative
concerns and still does not include provisions that would provide “retirement
security” in a state where state employees are not in the Social Security
Steven Procopio, chief of staff
for the Division of Administration, said LASERS should support the legislation,
billing it as purely “cleanup.” He said he did not understand the opposition.
The legislation has been prefiled
for consideration in the legislative session that opens April 8.
Gov. Bobby Jindal’s signature
retirement bill of the 2012 session is scheduled to go in effect July 1. The
administration has resisted a delay in the plan which operates similar to a
401(k) pension plan but differs because the employee accounts cannot be reduced
if there are investment losses.
But on Friday, Procopio
conditionally supported a resolution to suspend the law until July 1, 2014.
The resolutions cite an
unresolved constitutional challenge as well as federal tax and Social Security
equivalency determinations that have not been made.
Procopio said he could go along
if the resolution only mentioned the need for a determination on the Social
Security equivalency of the plan prior to implementation. If it does not
provide equivalent benefits, employees and the state would have to also make
Social Security payments.
Procopio said the tax ruling was
an entirely different matter and the Internal Revenue Services allows time for
states to fix problems before penalties are levied.
The board agreed.
A state district judge ruled the
statute did not get the constitutionally required two-thirds vote to pass a
retirement measure that adds to costs. The Legislature actuary said the
cash-balance plan would increase expenses. A Jindal hired actuary said it did
The Louisiana Supreme Court heard
arguments earlier this week on the issue. The administration had sought an
expedited review because of the July 1 effective date and the legislative
session starting April 8, where any problems that might arise could be
In addition, the tax
ramifications and Social Security equivalency status of the plan have not been
ruled on by federal officials.
Adverse decisions from the IRS
could subject employees’ vested contributions and retirement system trust
earnings to taxes.
Some employees also would have to
be enrolled in Social Security if the state benefit is not equivalent to Social
Security’s — adding to state employee and taxpayer costs. The costs would be
levied retroactively from the plan’s start, according to Maris LeBlanc, LASERS
LASERS board voted to endorse
resolutions to be considered in the legislative session which opens April 8
that would suspend the law until June 30, 2014. The Legislature can approve
those resolutions by a simple majority vote. They cannot be vetoed by the