Pension proposal called a "disaster"

Proposed changes to the retirement system for state employees could be "a disaster," a top official with the Retired State Employees Association told a group of retirees on Wednesday.

RSEA Executive director Allen Reynolds spoke out against efforts to change from a defined benefit to a defined contribution system for state employees. The change would not affect any current retirees, but could affect benefits for future generations, Reynolds said.

"Such a plan would be a disaster for our retirement system in the long run," Reynolds said. "We don't think that's going to be good for the state, the retirement system or you as a retiree."

Under a defined contribution system, employees would pay into a retirement account, similar to the way many people pay into a 401(k). They would be responsible for planning and managing their account, and would be guaranteed benefits after retirement only until their account balance runs out.

"Creating generations of impoverished seniors seems to me to be a questionable public policy, especially when it's not going to save the state any money," said Louisiana State Employees Retirement System executive director Cindy Rougeou.

The proposed change will be introduced by Rep. Jim Tucker, R-Terrytown, speaker of the House of Representatives, Reynolds said. The bill has not been formally filed, but Reynolds and Rougeou urged members of the Acadiana RSEA chapter to rally against it.

"Your benefits are safe and secure, but we need to preserve the integrity of this plan going forward so it remains that way," Rougeou said. Your involvement in the upcoming legislative session is essential."

Retirees Urged to Fight Proposed Pension Changes

Allen Reynolds, president of the Retired State Employees Association of Louisiana, asked members of the local chapter Tuesday to help defeat a legislative attempt to change the retirement system for new employees.

Reynolds told the retired state employees that proposed legislation to convert the present defined benefits plan to a defined contribution plan, would be a disaster for the individual retiree as well as for the state retirement systems.

Reynolds said the defined contributions plan transfers all of the risk of the system from the state to each employee.

One of the issues the Legislature is concerned about is the unfunded accrued liability that exists within the retirement system, Reynolds said.

“But frankly, this legislation will do absolutely nothing to address the unfunded accrued liability and, at worst, may increase costs of retirement to the state of Louisiana.

If an employee guesses wrong about how long they are going to live after they retire — say you figure you retire at 60, you’re going to live to 85 — oops, you happen to live to 90 and you planned your retirement for that 25 years, you’ve got a problem,” he said. “You’re going to be awfully poor for five years.”