Capitol News Bureau
The Louisiana Senate gave final
approval Wednesday to a year’s delay in Gov. Bobby Jindal’s new pension plan
for future state employees.
The Senate voted 35-0 for a
House-passed resolution suspending the law scheduled to go into effect July 1.
House Concurrent Resolution 2
sponsored by state Rep. Joe Harrison, R-Napoleonville, won overwhelming support
through the legislative process.
The Jindal administration
originally opposed the delay, but reversed course with the filing of the
special resolution that can suspend a law without the governor’s approval.
The administration has filed what
it calls a “clean up” bill to fix flaws.
“It resets the clock. There are a
lot of issues to work out and we need some more time,” said state Sen. Fred
Mills, R-St. Martinville.
Jindal’s 401(k)-type “cash
balance” retirement plan was approved during the 2012 Legislature.
“Cash balance” is being
challenged in court over claims it is unconstitutional. A state district judge
sided with the Retired State Employees of Louisiana Association that the
measure required a two-thirds vote for passage which it did not get. The case
is pending before the Louisiana Supreme Court.
Also pending is an Internal
Revenue Service determination on whether the pension plan provides a benefit
that is equivalent to that of Social Security. An adverse determination would
require the new state employees to be enrolled in Social Security, thereby
adding to costs of both employees and government agencies.
The Louisiana State Employees
Retirement System opposed the adoption of the plan, noting that it would not
provide financial security for state employees who do not have Social Security
as a safety net.
Under the “cash balance” plan
employees would contribute 8 percent of their pay toward retirement and the
state as employer 4 percent.
Interest earned from investments
would be credited to the employee’s retirement account with 1 percent withheld
to guard against investment losses. As written there would be a 10 percent cap
on investment earnings.
The employee could never lose
money because of the reserve fund that would make up the difference.
Original report here.