Tuesday, May 7, 2013

Senate Backs Cash Balance Delay

The Louisiana Senate on Monday afternoon endorsed an one-year delay in the start of Gov. Bobby Jindal’s 401(k) type pension plan for new state employee hires.

The Senate voted 34-0 for Senate Concurrent Resolution 1 which would suspend the law until June 30, 2014.

State Sen. Page Cortez, R-Lafayette, said the delay is needed because the state has not received word from the IRS whether the plan meets the test of being equivalent to Social Security.

If the so-called “cash balance” plan fails to meet the test, state employees would have to be enrolled in Social Security and the employee and employer — the state — make extra contributions.

A retirement system actuary has filed papers with the IRS indicating that the “cash balance” plan may fall short in providing sufficient pension income for some employees.

The cash balance plan is also under constitutional challenge over it not receiving the required two-thirds vote for legislative passage. The case is pending in the Louisiana Supreme Court.

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