LASERS Sustainability Affirmed in Legislative Actuary Report

A new report, Sustainability of the Louisiana State Retirement Systems, was presented by the Legislative Actuary last week at the Public Retirement Systems Actuarial Committee (PRSAC) meeting. The conclusions in the report affirm the sustainability of LASERS. The most important findings include:

• The defined benefit plan administered by LASERS is inexpensive, about half the cost of Social Security;

• The debt payment (Unfunded Accrued Liability), makes up the lion's share of the state's employer contribution to LASERS; which means changing the type of benefit plan we offer would not improve the state's financial situation;
  
• The positive financial status of the LASERS plan, coupled with the difference that legislative reforms are making to reduce the debt payment, indicates there is a high likelihood that the UAL will be paid off early.

For details, view the Legislative Actuary's PowerPoint Presentation from the meeting.

Additional information is found in this report by The Advocate.

LASERS Releases New Video

Click here to view the video.

Did you know your unused leave can pay off at retirement? Find out how unused accumulated annual and sick leave can become an additional benefit by watching LASERS new educational video, now available on the LASERS YouTube channel and LEO. 

Please be aware that access may be denied to YouTube at your workplace because of filters put in place by your agency. LASERS has placed some educational videos on LEO in the event you are unable to view YouTube. Follow these instructions for the LEO Portal.

If you wish to be notified each time LASERS uploads a new video, we encourage you to subscribe to our channel by clicking the "subscribe" button located on the LASERS YouTube page. 

LASERS Board Elects New Chair and Vice Chair

The LASERS Board of Trustees unanimously elected Thomas Bickham and Janice Lansing as new Chair and Vice Chair, respectively, at its January meeting. The 13-member policy-making Board of Trustees has fiduciary oversight over LASERS.

Thomas Bickham, Undersecretary of the Department of Public Safety and Corrections, will lead the LASERS Board as Chair. Bickham has served as an active member Trustee since 2012. He most recently chaired the Management Committee of the LASERS Board.

Janice Lansing, Chief Financial Officer of the Coastal Protection and Restoration Authority, will serve as the new Vice Chair. Lansing has served as an active member Trustee since 2010. She most recently chaired the Investment Committee of the LASERS Board.

LASERS Executive Director Cindy Rougeou said, “Under the leadership of Thomas Bickham and Janice Lansing, we will continue to serve our members well in 2015 and ensure that LASERS Benefits Louisiana.”

LASERS Finanical Reports Now Available

We are pleased to announce that the Comprehensive Annual Financial Report (CAFR) for LASERS fiscal year ending June 30, 2014, is now available on our website. 

LASERS investment return for the fiscal year was 18.8 percent, bringing the total asset value of the System to the highest in its history. 

The CAFR, along with the Summary Annual Report or Popular Annual Financial Report (PAFR) may be found here on our website. 

New Retirement Study Reveals Good News for Louisiana Economy

A 2014 study by the National Institute on Retirement Security (NIRS), Measuring the Economic Impact of DB Pension Expenditures, reveals that benefits paid by state and local pension plans had a total impact of $6.1 billion on Louisiana's economy.

$3.0 billion in direct economic impacts were supported by retirees' initial expenditures, followed by an additional $1.9 billion in indirect impact resulting when these businesses purchased additional goods and services.

For more information about Louisiana, view the NIRS study.

LASERS Restructures Investments Staff

Darren Founerat

Laney Sanders

A restructure of the LASERS investments staff was approved by the LASERS Board of Trustees at its July 25 meeting. Darren Fournerat and Laney Sanders were internally promoted to Assistant Chief Investment Officers, two new positions created to fill the Deputy Chief Investment Officer vacancy.

LASERS Chief Investment Officer Bobby Beale said, “Both Darren and Laney have been an important part of LASERS Investment Division for quite some time. They are excellent investment professionals and have earned this promotion.”

Fournerat was previously LASERS Director of Alternatives. He has a Master of Business Administration (MBA) with a concentration in Finance from LSU. He is a Chartered Financial Analyst (CFA) and Chartered Alternative Investment Analyst (CAIA).

Sanders was previously LASERS Manager of Private Equity. She has a Master of Science in Finance from LSU. She is a Chartered Financial Analyst (CFA) and Certified Treasury Professional (CTP).

The Investments Division at LASERS manages approximately one-third of the retirement fund internally, saving millions of dollars a year in fees, and continues to be highly ranked nationally among public pension fund peer comparisons.

“We are fortunate to have the expertise of Darren Fournerat and Laney Sanders,” said LASERS Executive Director Cindy Rougeou, “and with their skills, we will continue to meet our objectives to assure the financial soundness of the System.” LASERS provides a defined benefit pension plan that covers approximately 150,000 members. LASERS pays over $1 billion in annual benefits to retirees and their beneficiaries, providing a strong and reliable economic stimulus for Louisiana.

For more information, please contact LASERS Public Information Director Tonja Normand at tnormand@lasersonline.org or 225.922.1131.

State Pension Boards Approve Change

Marsha Shuler

The Advocate

Louisiana’s two largest statewide retirement systems took a step that could reduce their long-term debts and ultimately lower the costs paid for state government retirements.

The Louisiana State Employees Retirement System and the Teachers Retirement System of Louisiana boards voted to reduce their projected annual investment returns from 8 percent to 7.75 percent.

The investment returns are used in the calculation of the rates that government employers contribute toward funding the system.

Any earnings about the 7.75 percent return on the investments made by the pension systems go to paying down the “unfunded accrued liability,” said Legislative Auditor Daryl Purpera. 

More commonly called the UAL, it is the amount of money that has not been set aside to cover the cost of pension benefits promised in the future. The UAL for the four statewide retirement systems now hovers near $19 billion.

State agencies and schools, the employers, are making additional payments to help lower the UAL, but those mandatory payments put a strain on the budgets for other expenses.

The change in interest rates approved by LASERS and Teachers, combined with a recently passed law, could relieve some of the budget pressures caused by the big payments.

“We have a severe problem with underfunding. If we have an opportunity to accelerate repayment of the UAL, we ought to be taking advantage of it,” said Purpera, who chairs the Public Retirement Systems Actuarial Committee.

LASERS Deputy Director Maris LeBlanc said: “Because we expect to earn less, then the more money we make over that is money to put toward the debt.”

The rate reduction under normal circumstances would trigger an increase in state and school systems’ contributions because the systems would count on less earnings from investments.

But the state and schools will end up paying the same or a little less because the reduction will go into effect at the same time as a law which directs more of the pension systems’ excess investment earnings into debt reduction, said Maureen Westgard, executive director of the Teachers system.

The Teachers board voted to lower the expected return because “any impact that would have been felt would be offset,” said Westgard.

“The way we presented it to our board is ‘the planets are aligned for us,’ ” said LASERS Executive Director Cindy Rougeou. “Based on things that happened during the legislative session and what we expect our investment returns will be ... we are expecting to reduce (the state contribution) by 1.5 percent.”

Rougeou said the calculation is based on a 14 percent investment return, “and we expect that’s going to be closer to 18 percent.”

Westgard said Teachers is anticipating a return of more than 17 percent during the fiscal year which ended June 30.

Both systems are chalking up big investment returns today, but the 30-year average return is 8.2 percent for LASERS and 8.54 percent for Teachers.

Westgard and Rougeou said the new 7.75 percent assumption is realistic. Both referred to a new National Association of State Retirement Administrators report which looked at 126 different public pension plans. More than half reduced their investment assumptions since 2008. The average is 7.72 percent — right at the 7.75 percent adopted by Teachers and LASERS.

Lowering the rate will help bring more funds into the system, said Rougeou. “You try to find that perfect balance,” she said. “If you lower the rate more than you need to, you are going to put a burden on current taxpayers they should not have to pay.”

LASERS Board Takes Positions on Prefiled Retirement Bills

At the February 21 LASERS Board meeting, Trustees voted to take positions on 24 prefiled retirement bills that would directly impact LASERS if passed. The positions taken are based on the initial language of the legislation. 

To review a synopsis of each bill and the Board's position, please visit the 2014 Legislative Session page on the LASERS website. The page is organized by topics, such as COLAs and supplemental COLAs. 

Once the 2014 Session begins on March 10, progress on these proposed retirement bills will be tracked and updated on the LASERS website. A weekly Member Connection email will also be sent to you with updated information on these retirement bills. 

The 2014 Legislative Session ends on June 2. 

Listen LASERS Podcast Episode 2 Now Available

Episode 2: The Scoop on RSEA 

 

In this episode, RSEA Executive Director Frank Jobert discusses the organization's new brand, outreach efforts, membership, and the 2014 retirement bills that could impact active and retired members.

These podcasts are a resource for LASERS members. Please be aware that streaming audio access may be denied at your workplace because of filters put in place by your agency

Listen LASERS podcasts are available on the LASERS website and iTunes.
For more information on RSEA, visit their website. 

Please email your Listen LASERS questions to PIDrequest@lasersonline.org. 

Annual Statewide RSEA Meeting Schedule: Where is Your Chapter Meeting?

RSEA will conduct their annual statewide chapter tour in February and March. A LASERS rep will present at each meeting. Members are encouraged to attend their respective chapter meetings for up-to-date information on issues affecting their pension benefits.

                                     

Active and retired state employees are eligible to join RSEA and are invited to attend.

Alexandria              Thursday, February 13 at 9:30 a.m.

                                   Kees Park Community Center

                                   2450 Hwy 28 East, Pineville

Lake Charles         Tuesday, February 18 at 9:30 a.m.

                                   Lake Charles Civic Center, Contraband Room

                                   900 Lakeshore Drive, Lake Charles

Acadiana                Wednesday, February 19 at 9:30 a.m.

                                  The Scott Events Center

                                  100 Lions Club Road, Scott

Baton Rouge         Thursday, February 20 at 9:30 a.m.

                                   Holiday Inn South

                                   9940 Airline Hwy., Baton Rouge

North Shore           Wednesday, March 5 at 9:30 a.m.

                                   Greater Covington Center, Bogue Falaya Hall

                                   317 N. Jefferson Ave., Covington

Coastal                    Thursday, March 6 at 9:30 a.m.

                                   Quality Hotel

                                   210 South Hollywood Road, Houma

New Orleans          Friday, March 7 at 10:00 a.m.

                                   Landmark Hotel

                                   2601 Severn Avenue, Metairie

New Video Explains Social Security Offsets

If you are interested in learning about the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO), please watch our new video in the educational outreach series. This video explains how these federal offsets can affect your Social Security benefit if you receive a LASERS benefit. 

If you wish to be notified each time LASERS uploads a new video, we encourage you to subscribe to our channel by clicking the "subscribe" button located on the LASERS YouTube page.

Rougeou Updates Media on LASERS

Baton Rouge Press Club

LASERS Executive Director Cindy Rougeou and Legislative Auditor Daryl Purpera jointly spoke to the Baton Rouge Press Club on Monday, November 4.

Rougeou provided an update on the status of LASERS, including how reforms have improved the System, investment performance, and the impact of the recent layoffs on System health. Purpera focused on the cost of the accruing benefit as compared to Social Security, the employee and employer contribution rate, funding level and progress toward payment of the unfunded accrued liability (UAL), including the funded ratio. Rougeou and Purpera fielded questions from the audience following their presentation.

Watch a clip from the Baton Rouge Press Club presentation (5 minutes). 


The Jim Engster Show

Radio host Jim Engster interviewed Cindy Rougeou on Wednesday, October 30. Rougeou shared the latest information about LASERS, touching on investment performance and the health of the System. She reassured members that the retirement system is solvent and in great shape for the future.

In case you missed the interview, visit the WRKF website here and advance the broadcast to the 41:05 minute mark.  

Annual Actuarial Valuation Reveals Excellent Numbers for LASERS

Over the past fiscal year, LASERS has seen a $723 million increase in the value of its assets and has improved its funded ratio by over four percent.  With a nearly $700 million decrease in the unfunded accrued liability (UAL), or debt owed to LASERS, the State of Louisiana will save millions of dollars in its employer contribution next year.  "This report is excellent news for our System and our State," noted LASERS Executive Director Cindy Rougeou. "The value of our plan is up, the debt is substantially reduced, and the State of Louisiana will save nearly $26 million in payments next year," Rougeou added. The LASERS Board of Trustees adopted the annual LASERS actuarial valuation report for the period ending June 30, 2013, at its September 27 meeting. The annual report was presented by LASERS Actuary Shelley Johnson, who noted that the changes were driven primarily by excellent investment returns and a significant reduction in the size of the state payroll.  Over the past fiscal year, the number of LASERS active members has decreased by over 8,000.  While the amount of money the State must pay the System will be less, the sizeable reduction in the amount of state payroll will cause the employer contribution rate, a percent of payroll, to increase. The valuation includes a statutorily set payment schedule for the UAL reflecting that the debt owed to the System is expected to decrease by more than $2 billion during the 10-year period of 2012-2022, and by $3.5 billion during the 15-year period of 2012-2027. To read the complete LASERS Annual Actuarial Valuation, refer to the Annual Reports page on the LASERS website.

Opinion: Public Plans No Windfall for Workers

Written by Dennis Persica 
Original article in The Advocate
September 12, 2013

One of the more interesting philosophical flip-flops in the debate over public-employee pensions is how willing people are to use a level-the-field argument against government workers.

But first, a disclosure: As the surviving spouse of a former state worker, I get a monthly benefit from LASERS, the Louisiana State Employees Retirement System.

Back to the discussion: Look at the comment stream on any online story about retirement benefits for public workers, and you’re likely to see a certain sentiment expressed. It goes like this: Defined-benefit pensions are a thing of the past in private industry, so why should government employees still be entitled to them?

If you raised that “leveling” argument in any other discussion, though, you’d be shot down promptly, and probably by the same people.

Tax better-off folks to pay for government services for the classes below them? Answer: That’s socialism!

Enact affirmative action programs to ensure that opportunities are spread out to an ethnically diverse corps of job seekers? Answer: It’s not about race, it’s about finding qualified employees.

But talk about preserving government pensions, and suddenly we’re fighting like crabs in a barrel, with people demanding that public pensioners be dragged down to the level of private-industry workers who have no access to defined-benefit pensions.

There are a few things to remember about government retirees. For Louisiana state employees, as well as many other public employees across the country, there is no Social Security to fall back on. The same once was true of federal workers; they contributed only to the federal retirement system but not to Social Security. When President Ronald Reagan and a Democratic Congress decided to try to fix Social Security, they required federal employees to contribute to it.

People who’ve spent a lifetime in state or local government service may have only their public pension coming to them. That’s a major difference between those on a public pension and those on one provided by private industry. If the private pension program goes belly-up, the former employee still can draw Social Security.

Another difference between government-pension systems and private-industry pensions is this irony: If a private-industry pension program runs into trouble, its retirees wind up on the equivalent of a government pension, via the Pension Benefit Guaranty Corp. PBGC works as a kind of insurance company (businesses pay premiums into it) and takes over pension systems that run into trouble.

It will pay a retiree a maximum of $57,477 per year in benefits, and that maximum changes every year. So, someone with a pension from a private system that’s run into trouble can be assured they’re not going to be living on the street, begging for food. However, a government employee whose pension plan defaults –— and all eyes are on Detroit at the moment — has no protection. PBGC does not cover public pensions.

Yes, there have been abuses in the system, as we saw a few years ago in Jefferson Parish, but that’s no reason to let public-pension systems wither on the vine. After all, no one’s talking about shutting down Wall Street just because some people occasionally figure out ways to cheat investors.

Usually, the pension abusers are those who have enough political pull to game the system to their advantage. Most rank-and-file public employees don’t have that, and they would be the babies thrown out with the bathwater if we decided to let a troubled public pension system die just because private-industry workers don’t have access to similar plans.


Dennis Persica is a New Orleans-area journalist. In his weekly column, he shares his thoughts and observations about people, places and issues in the New Orleans area. Persica’s email address is dpersica@theadvocate.com.

Rougeou Shares Positive News at Open Forum

LASERS Executive Director Cindy Rougeou welcomed state agency human resource (HR) staff to the LASERS Annual Open Forum on Wednesday, August 28. The meeting is an opportunity for LASERS to share the latest news and changes affecting retirement for LASERS agencies and members and hear concerns from the HR community.

In her opening remarks, Rougeou addressed the sustainability of LASERS. She commented that questions have been raised about the soundness of pension systems given the recent news about the bankruptcy filing of the city of Detroit. "We are not Detroit. We are not going bankrupt," said Rougeou.

In addition to a 10-year market return of 8.2 percent and a 2013 fiscal year market return of 12.6 percent, Rougeou pointed to a 10-year cash flow analysis that LASERS recently completed. While LASERS has paid out over $7 billion in benefits in the past 10 years, the System has collected $11 billion from contributions and investment earnings. Because 90 percent of our retirees stay in Louisiana, she noted that the benefits they have earned and expend result in a powerful and positive economic generator on our state's economy.

Rougeou also gave an overview of the payment schedule of the Unfunded Accrued Liability (UAL), which is the debt owed by the State to the System. On the current payment schedule, in nine years, the UAL is set to drop by $1.4 billion and by $4.4 billion in 20 years.

Rougeou also touted recent cost-saving measures, stating, "It is too often forgotten that since 2005, the Legislature has made significant changes or reforms to the benefit structure. With the passage of Act 75 of 2005 and Act 992 of 2010, the cost of LASERS rank-and-file plans will be reduced by nearly $800 million," Rougeou said.

Rougeou also commented that LASERS member benefits are funded during the active working life of the member, unlike Social Security which operates as a "pay-as-you-go" system.  She reassured attendees that LASERS benefits are protected by the Constitution, as is the financial soundness of the System.

September Benefit Payments

September benefit payments are scheduled to be paid on the first of the month. This year, September 1 falls on a Sunday and September 2 is the Labor Day holiday. Receipt of your funds can be affected by whether you receive a check or direct deposit and your bank's rules when the first falls on a weekend or holiday.

Direct Deposits are guaranteed to be in your bank or credit union on the first day of the month. Be aware that if the first falls on a Saturday, Sunday, or holiday, funds may not be available until the following business day. In these cases, please contact your financial institution directly for information on when your funds will be made available to you. That decision is made by your financial institution, not LASERS. If you have not received your monthly benefit payment by the first business day of the month, please contact LASERS in Baton Rouge at 225.922.0600 or toll-free at 800.256.3000.

Paper checks are mailed for delivery on the first of each month. However, delivery can be delayed because of inclement weather and holidays. Also, the Postal Service is considering delivery changes such as eliminating Saturday deliveries. If you have not received your monthly benefit check by the fifth business day of the month, you should take the following steps:

1. Notify LASERS in writing that you wish to have the check reissued.
2. The written notification must include your name, Social Security number, and signature.
3. Sign up for Direct Deposit to avoid this problem in future. Complete Form 04-05, Authorization for Direct Deposit, to start the process.

LASERS Posts Strong Investment Return

The Louisiana State Employees’ Retirement System (LASERS) has posted an investment return of 12.6 percent for the fiscal year ending June 30, 2013, which brings the total asset value for LASERS to over $9.7 billion. 

“We are pleased to announce double digit returns for the 2012-2013 fiscal year,” said LASERS Chief Investment Officer Bobby Beale. “In addition, LASERS continues to focus on long range investment returns, which rank us in the top quartile among our peers nationwide.” LASERS highly credentialed staff internally manages approximately one-third of its portfolio, saving the System millions of dollars per year in professional management fees.

LASERS 10 year investment return is 8.2 percent. The most recent peer comparison as of June 30, 2013, places LASERS in the top 19 percent ranking over a 10 year period for public funds greater than $1 billion, according to Wilshire’s Trust Universe Comparison Service (TUCS). TUCS is the most widely accepted benchmark for the performance of institutional assets and represents the largest database of any peer-comparison service in the industry.

“Our investment performance is consistently among the best in the nation,” said LASERS Executive Director Cindy Rougeou. “We are pleased to report to our members that LASERS is continuing to move forward in a positive direction.”

Rougeou Named President Elect on NASRA Board

LASERS Executive Director
Cindy Rougeou

Cynthia Y. Rougeou, Executive Director of the Louisiana State Employees’ Retirement System (LASERS), has been named President Elect of the Executive Board by members of the National Association of State Retirement Administrators (NASRA).

NASRA is a non-profit association whose members are the directors of the nation’s state, territorial, and largest statewide public retirement systems. NASRA members oversee retirement systems that hold more than $2 trillion in assets and that provide pension and other benefits to more than two-thirds of all state and local government employees.

Rougeou assumes the new position after serving as first Vice President of the Executive Board. Previously, she was Second Vice President of the Executive Board and prior to that, NASRA’s Region 4 Vice President, which includes Louisiana, Arkansas, Texas, Oklahoma, Missouri, Colorado, New Mexico, and Kansas.

“I am honored to be a part of NASRA and their mission to support and assist other public pension systems around the country,” said Rougeou. “In these challenging times, it is vital to communicate with decision makers about the importance of a sound public retirement system. NASRA provides the resources to assist in achieving this critical goal.”

For more information, contact Tonja Normand at 225.922.1131 or tnormand@lasersonline.org.

LASERS Responds to JR Ball Editorial

It is unfortunate that JR Ball’s last editorial column for Business Report was so blatantly ill-informed about public pensions. His conclusion that there is a “crisis” about which “nothing is being done” ignores the facts.

“Change” has been the status quo for public pensions for state employees since 1987 when a constitutional amendment required the State to pay its unfunded liability to the retirement system by the year 2029. The legislature has stuck to a payment plan that now starts to pay principal on that debt. In fact, the debt owed by the State to LASERS should decrease by $500 million in 2017, $1.4 billion in 2022, and by $4.4 billion in 2032.

Criticizing the legislature for “making the problem worse” by increasing benefits to make “public-sector voters happy on Election Day” ignores the fact that the legislature has, since 2005, decreased benefits for new public employees. Further, a 2007 Constitutional amendment requires any new benefits to have a funding source.

He argues that the assumed rate of return for public pensions is too high. However, LASERS average actuarial return over the past 29 years exceeds 8 percent.

Retirement benefits he described as “lavish” are earned by State employees, who do not have Social Security. Those benefits average $22,236 per year and are funded by contributions made by those employees, investment earnings by the retirement system, and contributions by the State agencies employing them.

An informed discussion about public pensions is welcome. The editorial was not informed.

Cindy Rougeou,

LASERS Executive Director

New LASERS Video Preps Members for Counseling Session

In LASERS latest video, Executive Director Cindy Rougeou presents information, targeted to rank-and-file members, to assist with preparation for an individual counseling session with a LASERS Retirement Benefits Analyst. A companion PowerPoint presentation is paired with the video to provide more detailed information to members.

In the video, Rougeou covers eligibility questions, retirement types and options, and leave balances. Members who have upcoming appointments with LASERS Benefits Analysts are strongly encouraged to view the video and review the PowerPoint BEFORE their appointment.

The Preparation for Individual Counseling video is available to view on the LASERS YouTube Channel located here. A link is provided for the companion PowerPoint.

To be notified of new videos from LASERS, please subscribe to our channel by clicking the "subscribe" button.