The Jindal administration’s proposed revamp of a 401(k)-type pension plan for new state employees ran into trouble Thursday.
The state House Retirement Committee refused to approve what was billed as a “clean up” measure to one approved by the Legislature last year which has encountered constitutional problems.
The measure got locked up in tie 6-6 votes after a top state employee pension official said the revision would actually provide “a lesser benefit” than what is in the law under challenge. The panel declined to pass it nor involuntarily defer the revamp which would have effectively killed the bill.
House Bill 68 sponsor Retirement Committee Chairman Rep. Kevin Pearson, R-Slidell, then moved to voluntarily defer the measure.
Gov. Bobby Jindal pushed the so-called “cash balance” plan during the 2012 legislative session for state employees, including those in higher education, hired after July 1, 2013.
It was only major part of a pension revamp package to make it through the legislative process. Other parts that impacted current state employees died.
The Retired State Employees Association of Louisiana filed a lawsuit contending the legislation did not get the two-thirds vote required under the state constitutional if pension law changes result in a cost. A state district court judge agreed. The issue is on appeal to the Louisiana Supreme Court.
The revised bill offered by Pearson would have eliminated the cost attached.
Cindy Rougeou, executive director at the Louisiana State Employees Retirement System, said the cash-balance plan became cost-neutral “because a lesser benefit is being provided” through the imposition of a cap on the interest that a employee could receive from investment of employee and employer contributions.
Rougeou said LASERS continues to oppose the measure because of the “lack of retirement security” for pension system members who have no Social Security to fall back on.