LASERS Recognized Nationally

The Louisiana State Employees' Retirement System (LASERS) has been presented the 2016 Public Pension Standards Award for plan funding and administration excellence for the thirteenth consecutive year. Awarded by the Public Pension Coordinating Council (PPCC), an alliance of the National Association of State Retirement Administrators, the National Conference on Public Employee Retirement Systems, and the National Council on Teacher Retirement, public employee retirement system recipients are recognized for high professional standards in the areas of plan design and administration, benefits, actuarial valuations, financial reporting, investments, and membership communications.

LASERS was also recognized in a recent report from the Pew Charitable Trusts, which examined public pension plans' accounting assumptions and payment schedules to see if they were holding up over time. This analysis determined whether or not established contribution policies that are sufficient to pay down pension debt, were actually being followed. The report concluded that the top five plans in the best shape are West Virginia, New York, Indiana, South Dakota, and Louisiana. As noted in Governing magazine, "The Takeaway: This metric gets at the true health of a pension plan better than the annual funding status because it tells us in which direction a pension plan is going."

LASERS Executive Director Cindy Rougeou said, "We are proud that our System has once again been recognized by the PPCC for outstanding management among our peers and that the Pew report acknowledged our longevity for generations to come. Both positives on the national level convey to our members and state that LASERS Benefits Louisiana."

Louisiana in Top Five of State Pension Plans

This excerpt is taken from The Week in Public Finance in Governing magazine.

By Liz Farmer, August 26, 2016

Most Pensions Falling Behind

A new analysis of state public pension plans this week shows that only one in three states are actually on a path to reduce their unfunded liabilities.

The report, by the Pew Charitable Trusts, used a new metric called net amortization, which essentially measures whether a pension plan's accounting assumptions and payment schedule are holding up over time. Only 15 states are achieving positive amortization, according to Pew. In other words, they're following contribution policies that are sufficient to pay down pension debt. The remaining 35 states are facing negative amortization, or are following contribution policies that allow the funding gap to continue to grow.

Based on the measure, the plans in the worst shape are, in order: Kentucky, New Jersey, Illinois, Pennsylvania and California. The report does note that Pennsylvania has committed to large contribution increases and is projected to reach positive amortization by 2018. The top five plans in the best shape are West Virginia, New York, Indiana, South Dakota and Louisiana.

The Takeaway: This metric gets at the true health of a pension plan better than the annual funding status because it tells us in which direction a pension plan is going. Net amortization supplies the long view, which seems appropriate when talking about a program that's supposed to last for generations.

Case in point: 40 states reported decreased unfunded liabilities in 2014 thanks to stronger-than-expected investment returns. This is great news for the short term, but, according to the report, only a small number met the positive amortization benchmark. "Investment returns vary widely over time," the report said, "and most governments that sponsor pension plans made contributions that were not large enough to reduce debt based on expected long-term rates of return."

The measure helps explain why some plans -- such as Houston's or the state of Alabama's -- haven't made up ground even though governments have paid their full pension bills.

Details of Social Security Offset Legislation Postponed

The federal House Ways & Means Committee met Wednesday, July 13, but consideration of H.R. 711, the "Equal Treatment of Public Servants Act of 2015" was postponed. The proposed legislation would repeal the current Social Security Windfall Elimination Provision (WEP) and put in a proportional formula that calculates benefits using a public servant's actual earnings.

Rep. Kevin Brady (R-TX) commented that over the past several days, it was evident that public servants were not in agreement over the legislation. Both he and Rep. Richard Neal (D-MA) remarked that the community needed to come together and that a bipartisan solution was necessary to move forward.

The WEP affects those LASERS retirees who have also worked in the private sector by reducing or eliminating their Social Security benefits. Keep in mind that your LASERS pension is NOT diminished by WEP, only Social Security benefits if applicable.

LASERS will continue to distribute information regarding the WEP and relevant legislation, but our knowledge of this federal law is limited. If you have specific questions on how you may be impacted by WEP, please contact the Social Security Administration for assistance. You may also contact RSEA, your advocates in the Louisiana Legislature and National Congress on issues relating to retirement and healthcare.

 

WEP Resources:

Windfall Elimination Fact Sheet

Social Security Offsets Chapter in the LASERS Membership Handbook

Social Security Offsets Video

View the Recording of the Ways & Means Committee Meeting