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

Making Social Security Fair for All

Original article here.

By Reps. Kevin Brady (R-Texas) and Richard Neal (D-Mass.)

July 12, 2016

Social Security is an important program that has been serving our seniors and individuals with disabilities for decades. Unfortunately, the program is not without its flaws. Today many Americans — specifically teachers, firefighters, police officers and other public servants who have paid into public pensions and Social Security — are not being treated fairly when it comes to Social Security. 

It’s because of a well-intended but arbitrary policy known as the Windfall Elimination Provision, or WEP. Congress established the WEP in the last major overhaul of Social Security to ensure hardworking Americans who have paid into Social Security throughout their careers receive the benefits they deserve.

However, the provision’s one-size-fits-all approach to calculating benefits has unintended consequences for Americans who have worked public sector and private sector jobs. The WEP arbitrarily reduces benefits by using a special formula for public servants who spent years working in Social Security-covered jobs and non-covered jobs.

Our firefighters, teachers and police officers deserve better. That’s why we’re working together on the Equal Treatment of Public Servants Act of 2015, legislation to repeal the WEP and replace it with a formula that calculates Social Security benefits for our firefighters, police officers, teachers and other public servants just like all other workers. The bill does exactly what the name suggests: treats all workers fairly. 

We propose looking at all lifetime earnings and using a proportional formula to calculate Social Security benefits. In other words, two workers with the same lifetime earnings — one who has spent an entire career in Social Security-covered employment and another who has worked in both covered and non-covered work — will receive a Social Security benefit that is calculated the same way. Instead of arbitrarily reducing benefits, if a public servant only spent half of her career paying into Social Security, she will receive 50 percent of her Social Security benefit — just like someone who spent an entire career paying into Social Security receives 100 percent of his benefit. 

By replacing the WEP, it will also become easier for Americans to plan for retirement. Workers receive a Social Security statement to help plan for retirement, but right now, when a teacher, firefighter or police officer receives his Social Security statement, it’s wrong. It tells him what his benefit would be before the WEP is applied. Our bill will help ensure Social Security statements are accurate for public servants.

It’s not enough to fix the WEP for future retirees; we have to help public servants who are already affected. Our legislation will provide relief for current Social Security beneficiaries subjected to the WEP by providing a restoration of benefits payment each year. 

It’s been 12 years since the first version of the Equal Treatment of Public Servants Act was introduced, but our public servants have been calling on Congress to fix the WEP since it was put into place more than three decades ago. That means, for more than 30 years, our public servants have sat waiting to receive the benefits they deserve and that we know Washington can deliver. That’s far too long.

This commonsense solution has been embraced by our colleagues on both sides of the aisle — including President Obama, who included the proportional approach in his fiscal 2017 budget. The bipartisan Social Security Advisory Board called for the proportional approach, and the Bipartisan Policy Center included it in its recent Retirement Security Commission recommendations. Our legislation enjoys broad support, from the Texas Retired Teachers Association, Association of Texas Professional Educators, Mass Retirees and AARP. 

We can’t ignore the problem any longer. As one of our witnesses so eloquently said at one of our hearings on this bill, “justice delayed is justice denied.” Let’s fix the WEP in order to better serve our teachers, firefighters and police officers. Now is the time to ensure these men and women who dedicated their lives to us receive the retirement benefits they deserve.

Brady has served Texas’s 8th District since 1997 and is chairman of the House Ways and Means Committee. Neal has served the state of Massachusetts in the House since 1989 and is a member of the House Ways and Means Committee.

Retirement is NOT an Overnight Process

The preparations leading up to retirement involve teamwork ... and that team includes YOU, your agency, and LASERS. An important element in the retirement process is time, so planning is critical. Retiring in a day or two is nearly impossible and definitely not recommended. Optimally, you should start the process a minimum of 12 months away from your target retirement date. Check out these helpful LASERS resources on our website:

Lagniappe Guide to Retirement  Valuable information for active members including a 12-month guide to use as you approach retirement (page 20).

Countdown to Retirement Video View LASERS 5-minute video as we share the essential steps in counting down to retirement.

Membership Handbook Includes details defining all categories of our plans and answers to many questions you might have about planning for and enjoying your retirement.

Pre-Retirement Education Program (PREP) Workshop Attend a PREP workshop and hear from the LASERS staff on how to be prepared.

The key to a smooth retirement process is to plan early! If you have questions, schedule an appointment or speak to a Retirement Benefits Analyst at 225.922.0600 (Baton Rouge) or 800.256.3000 (Toll-Free).

Get Answers in LASERS New Video

Click here to view the video.

With more than 20 LASERS retirement plans, how do you find your plan? And once you find it, how do you know when you are eligible for retirement? 

To find answers to these questions and much more, view our latest video,What is Your Retirement Plan and Retirement Eligibility? The video is formatted for closed captioning and is 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 channel. 

Retirement Reforms Subject of New NASRA Report

A new report, Significant Reforms to State Retirement Systems, prepared by the National Association of State Retirement Administrators (NASRA), is a comprehensive review and compilation of public pension reforms since the Great Recession and global financial crisis. The report covers the period from 2009 to 2014 and marks the greatest period of change in the history of public pensions.

The research reveals that nearly every state reduced benefits, increased contributions, or both. Most did so while retaining the traditional pension plan. The majority of the reforms transferred a higher share of the risk associated with providing retirement benefits from the state or local government to its employees.

You can access the complete report here. For details about LASERS reforms, see page 32.

Letters: Optimism is alive in the form of Louisiana’s pension reform

In a guest column published June 7, Adam Crepelle calls for pension reform seemingly unaware that Louisiana has been a frontrunner across the country in reforming its public retirement systems. For almost 30 years, state legislators and the state retirement systems have partnered together on pension legislation that provides modest, reliable pensions for dedicated public servants at a sustainable cost.

In Louisiana, we’re so used to hearing bad news about our home. But, here’s some good news that we should all be aware of. To date, pension reforms associated with the state’s two largest retirement systems — Teachers’ Retirement System of Louisiana and the Louisiana State Employees’ Retirement System — have a projected $8 billion cost savings to the state. In fact, since Fiscal Year 2010, an additional $1.4 billion has been paid toward the debt as a result of these reforms. And, Louisiana, thanks to responsible pension reform, will be able to pay off long-term retirement liabilities before their required payoff date and provide economic relief to the employers of system members.

Just last year, the legislative actuary acknowledged this good news in a report that found TRSL and LASERS are positioned well to continue providing defined benefits far into the future. And recently, an Atlanta-based independent actuary said that the financial position of both TRSL and LASERS has improved faster than other systems in the country.

So, these reforms are working, and it’s important that we continue to allow them to work.

Switching to a different type of retirement plan, as Mr. Crepelle proposes, will not free Louisiana from its existing debt payments, but it will add uncertainty to the retirement security of many retirees who cannot participate in Social Security — as most private sector workers do.

Furthermore, the state has rigorous requirements in place that must be met before any COLA can be granted. First and foremost, the systems must have enough money to pay for the COLAs. And, by law, payment on retirement debt must be made before any money can be placed into accounts created to hold funds for COLA payments. On average, the COLAs granted this year will be enough to buy one tank of gas.

Louisiana has a solid track record of taking bold and important steps over the past 30 years to ensure the sustainability of its pension systems. We commend legislators, past and present, for the work that they have done, and look forward to continuing to work together to provide viable retirement systems that impact more than 332,000 lives as well as countless local economies across this state.

Maureen H. Westgard

TRSL director

Baton Rouge

Cindy Rougeou

LASERS executive director

Baton Rouge

Original article here.

State retirees to see bump in pension checks with Governor Edwards' COLA approval

Mark Ballard

The Advocate

A lot of retired teachers, troopers, school workers and state government employees will start seeing slightly bigger monthly pension checks starting July 1.

Gov. John Bel Edwards on Thursday signed into law a cost-of-living adjustment for nearly 125,000 pensioners who are over the age of 60 and have been retired at least a year. Most live in the Baton Rouge and New Orleans areas. It’s the first increase in two years.

Senate Bill 2, now called Act 93, distributes the cost-of-living adjustments, called COLAs, based on calculations that rely on the funding levels of the individual retirement systems.

Members of the Louisiana State Employees’ Retirement System are in line for a 1.5 percent increase on the first $60,000 of their benefits. Teachers Retirement System of Louisiana members will receive a 1.5 percent hike.

Louisiana School Employees’ Retirement System members get a 2 percent raise as do those with the Louisiana State Police Retirement System. A number of State Police retirees over the age of 65 also are eligible for another 2 percent increase.

The average monthly increase would be about $30 but could vary widely based on the circumstances of individual retirees.

The average retired teacher receives about $2,149 per month in benefits, so the average COLA increase would be $29.50. The average retired state worker’s pension is $24,660 annually. At 1.5 percent, the average increase per month would be about $27.

Senate Bill 2 was sponsored by Senate Retirement Committee Chairman Barrow Peacock, R-Shreveport.

Out of a half-dozen votes in committees and in both chambers, the legislation granting retirees a COLA received only one no vote. Central Rep. Barry Ivey, a Republican, opposed the measure in the House Retirement Committee as a gesture to remind his colleagues of the size of the debt being carried by the four retirement systems — $20 billion created partly because state government gave out COLAs in the past without setting aside enough money to pay for them.

The state constitution requires pensions be paid first, so if the systems go broke, taxpayers will be paying retirement benefits before buying books for public schools or repairing roads, he said.

Point made, Ivey voted for the COLA on the House floor.

COLAs ultimately will cost about $385 million. But that money doesn’t come from the state budget, which pays the costs of government agencies and currently has a $600 million deficit.

The money comes out of a fund called the “Experience Account” that collects excess investment dollars. That money can’t legally be used to pay anything but COLAs, though part of it goes to paying down the $20 billion debt of the retirement systems.

Retirement costs state government about $2 billion a year, but is not a line item in the $25 billion budget. Rather, each agency pays its portion out of its appropriation.

Another cost-of-living adjustment would not be available until the fund, called the Experience Account, is refilled.

Peacock linked the raise with two other bills that changed how the retirement systems operate.

Senate Bill 5 would require the retirement systems to timely pay administrative costs rather than roll those charges into the 30-year debt. Senate Bill 18 would reduce the amortization period — paying off debt on a fixed schedule — from 30 years to 20 years.

Edwards signed both of those measures on Thursday, too.

Original article here.

Pension increase for retired state workers, teachers passes

Mark Ballard

The Advocate

Retired state workers can plan on seeing a little bit more in their monthly pension checks as the state Senate, as expected, approved minor changes in two of the three bills that allow for a cost of living adjustment.

Senate Bills 2, 5 and 18 were approved with little discussion Wednesday and now head to Gov. John Bel Edwards, who is expected to sign the measures.

Nearly 125,000 retirees, who are over the age of 60 and have been retired for a year, will receive a modest boost on the first $60,000 of benefits. Most of the state’s retirees live in Baton Rouge and New Orleans areas.

The percentages are based on how well-funded each of the state systems are.

Retired state workers and retired public school teachers would receive a 1.5 percent increase; retired school workers would get 2 percent; and retired State Police troopers and staff would receive at least 2 percent.

The average monthly increase would be about $30, but the exact amounts could vary widely depending the circumstances of individual retirees.

It’s been two years since some of the state pensioners received a cost of living adjustment, called a COLA. That bump came with passage of a law aimed at tackling a $20 billion debt the four state retirement systems have incurred over the years of granting COLAs and of legislators not putting enough money into the systems to cover the promises made to state employees.

Act 399 set triggers for when cost of living allowances could be given. The check-offs include waiting every other year, ensuring enough money was in an account that collects excess earning on investments, and the systems hit a predetermined level of funding. Another criterion is whether there was inflation in the previous year. There wasn’t. But proponents argued that was because the price of energy fell so dramatically and threw calculation off. But the prices consumers paid for health care and groceries rose.

And the funds where excess earnings are parked — and from which COLAs will be paid — are full and cannot be used for other state government expenses. The COLAs granted in the legislation will cost $385 million.

The cost would not come from the state budget, which is $600 million in the red.

Senate Retirement Committee Chairman Barrow Peacock, R-Shreveport, sponsored the three bills. Senate Bill 2 awards the COLAs. Senate Bill 5 would require the retirement systems to timely pay administrative costs rather than roll those charges into the 30-year debt. Senate Bill 18 would reduce the amortization period — paying off debt on a fixed schedule — from 30 years to 20 years.

Original article here.

A plan to boost monthly pension checks for retired state employees, public school workers and teachers is headed to the governor's desk

THE ASSOCIATED PRESS

BATON ROUGE, Louisiana — A plan to boost monthly pension checks for retired state employees, public school workers and teachers is headed to the governor's desk.

The cost-of-living increase is part of a package of bills by Shreveport Sen. Barrow Peacock, chairman of the Senate Retirement Committee.

The pension hike is tied to adjustments in how the retirement systems pay for raises and administrative costs, aimed at lessening long-term debts.

All three bills won final legislative passage this week.

Nearly 125,000 retirees over the age of 60 will see increases, ranging from 1.5 percent for retired state workers and teachers to as much as 4 percent for retired state troopers. The average monthly increase will be about $30.

The increases are estimated to cost $383 million.

Senate Bills 2, 5 and 18: http://www.legis.la.gov

Benefits bump for Louisiana state retirees gets closer to Gov. John Bel Edwards' desk

Mark Ballard

The Advocate

Retired state workers are a step away from receiving cost-of-living increases after the Louisiana House approved Monday a benefits bump bill and two other linked measures that tweak the state retirement systems.

Two of the bills have minor amendments whose wording needs to be approved by the state Senate, but that consent is expected. The measures then would go to Gov. John Bel Edwards, who is expected to sign them into law.

The cost-of-living adjustments, called COLAs, would increase the monthly benefits checks of 124,741 pensioners over the age of 60, who have been retired for at least a year. Most live in the Baton Rouge and New Orleans areas.

Based on calculation of how well funded each of the state systems are, retired state workers and retired public school teachers would receive a 1.5 percent increase; retired school workers would get 2 percent; and retired State Police troopers and staff would receive at least 2 percent.

The average monthly increase would be about $30 but could vary based on the circumstances of individual retirees.

State Sen. Barrow Peacock, R-Shreveport, chairman of the Senate Retirement committee, had linked the benefits increase to passage of two other measures that alter the way the state retirement systems operate.

In quick succession, the House approved Senate Bill 2, which awards retirees COLAs; Senate Bill 5, which would require the retirement systems to timely pay administrative costs rather than roll those charges into the 30-year debt; and Senate Bill 18, which would reduce the amortization period — paying off debt on a fixed schedule — from 30 years to 20 years.

In the dozen votes held in committees and before the full House and full Senate, only one lawmaker cast a no vote. That was Rep. Barry Ivey, R-Central, in committee and he said he did so to make a point about the size of the state systems’ debt, which is about $20 billion. The money for the COLAs comes from an account where excess investment earnings were deposited and the $385 million ultimate cost would not come from the state budget, which is $600 million in the red.

House Retirement Committee Chairman Kevin Pearson, R-Slidell, said the three measures were the product of much negotiation and would provide needed improvements in the retirement systems as well as a needed boost for retirees who have seen their spending abilities decrease with rising costs of health care and groceries.

Democratic Rep. Sam Jones, of Franklin, sponsored another COLA measure — House Bill 32 — but it was not linked to any other legislation. His straight-up increase-the-benefit bill passed the House without a single objection and also is awaiting action in the Senate.

As representative last year, Edwards had voted on the COLA that was vetoed by then-Gov. Bobby Jindal. As governor, Edwards asked Jones, his House floor leader, to sponsor legislation that would increase monthly benefits payments to retirees.

Original article here.

House Bills Voluntarily Deferred

The House Retirement Committee met yesterday to consider five bills sponsored by Rep. Barry Ivey which would have an impact on LASERS if passed.

The following bills were opposed by the LASERS Board:

• HB 52 in its original form would have added four new members to the Public Retirement Systems' Actuarial Committee (PRSAC). Before discussing the bill, the author amended it to only add two members. After lengthy discussion about the role of PRSAC, the motion to report the bill favorably failed by a vote of 3 to 6. The author then voluntarily deferred the measure.

• HB 1092 would have required state retirement systems to use a uniform inflation assumption adopted by PRSAC in their annual actuarial valuations. Three actuaries representing the various state and statewide retirement systems explained the complicated process of setting the many assumptions used by the systems. The author voluntarily deferred the bill.

• HB 48 would have added five citizen members to the LASERS Board of Trustees. The author voluntarily deferred this bill without discussion.

• HB 917 would have removed the authority of the Board of Trustees to invest system assets, establish asset allocations, and set actuarial assumed rates of return. It would have created a Consolidated State Investment Committee. This bill was also voluntarily deferred without discussion.

HB 62 would have set a minimum employer contribution rate and created a funding deposit account for each state retirement system. The LASERS Board was neutral on this bill. The author indicated his intention to present this bill at a future meeting.

House Retirement Committee to Meet

The House Retirement Committee is scheduled to meet Thursday, May 5, 2016 at 9:00 a.m. There are currently five bills on the agenda, sponsored by Rep. Ivey, which would impact LASERS if passed.

• HB 48, would add five members to the LASERS Board of Trustees.  The members and their immediate families shall not be active or retired members of the System.  Two members shall be appointed by Speaker of the House, two by the President of the Senate and one by the Legislative Auditor. The only qualification for the new members is that they shall have filed state income tax returns for the previous five consecutive years.
  
  The LASERS Board opposes this bill since it would interfere with the composition of the Board without corresponding benefit. In addition to active and retired LASERS members, there are currently four ex-officio members of the Board; the Chairs of the Senate and House Retirement Committees, the State Treasurer, and the Commissioner of Administration. Additionally, all members of the Board are tasked with fiduciary duty that requires them to act solely in the best interest of the members.

• HB 52 would add four members to the Public Retirement Systems Actuarial Committee (PRSAC) - the Chairman of the House Committee on Retirement, or his designee; and an additional member appointed by that Chairman; and the Chairman of the Senate Committee on Retirement, or his designee; and an additional member appointed by that Chairman.
  
  The LASERS Board opposes this bill because it would change the nature of PRSAC from an actuarial committee to a policy committee.

• HB 62 would set a minimum employer contribution rate of 20 percent if the System is less than 100 percent funded or if the System reaches 100 percent funded status and the funded ratio later drops below 90 percent, and creates a funding deposit account. The LASERS Board is neutral on this bill.

• HB 917 would remove the authority of the Board of Trustees to invest system assets, establish asset allocations, and set actuarial assumed rates of return. It would create the Consolidated State Investment Committee to make investment decisions for all state retirement systems. The LASERS Board is opposed to this bill due to constitutional reasons.

• HB 1092 would require state retirement systems to use a uniform inflation assumption adopted by PRSAC in their annual actuarial valuations. The LASERS Board is opposed to this bill due to constitutional reasons.

Please note that meeting schedules and agendas are subject to change. Check the LASERS website daily for updates and for detailed information about proposed retirement legislation that may impact LASERS if passed.

House committee approves Senate COLA bills

Jim Beam

American Press

Three Senate bills tied together with a cost-of-living increase for members of four state retirement systems were approved Thursday by the House Retirement Committee.

Sen. Barrow Peacock, R-Bossier City, is sponsor of Senate Bills 2, 5 and 18. All three were approved unanimously by the full Senate and move to the full House.

Rep. Sam Jones, D-Franklin, has House Bill 32, which is similar to Peacock’s. However, his isn’t linked to the other two measures.

The House approved Jones’ bill unanimously, and it is awaiting action in the Senate Retirement Committee.

The four systems in both bills are the Louisiana State Employees’ Retirement System, or LASERS; the Teachers’ Retirement System of Louisiana; the Louisiana School Employees’ Retirement System; and the State Police Retirement System.

The increase would only be paid on the first $60,000 of a retiree or beneficiary’s benefit. The maximum amount would be 1.5 percent of the benefit for LASERS and the TRSL and 2 percent for LSERS and the SPRS.

The two COLA bills override current law for one year and provide a larger increase than what recipients would have otherwise received on July 1. Under current law, retirees on July 1 would have received only a 0.124 percent COLA.

The increase is linked to passage of S.B. 5, which would require the retirement systems to timely pay administrative costs rather than rolling them over. S.B. 18 would reduce the time for paying off retirement debt from 30 to 20 years.

Each state system board of directors would grant the COLA provided for under S.B. 2 on July 1 of this year. Funds would come from the systems’ experience accounts.

If the balances in the experience accounts on June 30 are less than the cost of the COLAs, the percentage increase would be reduced accordingly. LSERS is the only one affected. It has $23 million in its experience account, and its increase will cost $25.1 million.

Eligible under current law for the COLA are any regular retiree who has received a benefit for at least one year and who has attained at least age 60; any beneficiary of a regular retiree, beneficiary or both combined who has received a benefit for at least one year and if the deceased member would have attained age 60; and any disability retiree or any beneficiary who receives benefits based on the death of a disability retiree if benefits have been received by the retiree, beneficiary or both combined for at least a year.

LASERS has 33,575 regular retirees, 5,834 survivors and beneficiaries, and 2,457 disabled retirees. Total cost of its COLA would be $123.1 million. The TRSL has 58,751 retirees, 6,771 survivors and beneficiaries, and 4,121 disabled retirees. Total coast of its increase would be $224.7 million.

LSERS has 10,146 retirees, 1,662 survivors and beneficiaries, and 331 disabled retirees. Total cost of its increase would be $25.1 million. The SPRS has 696 regular retirees, 335 survivors and beneficiaries, and 62 disabled retirees. The cost of its increase would be $6.8 million.

Original article here. 

Louisiana House OKs cost of living increase for state retirees, but there's still another hurdle

Mark Ballard
The Advocate

Not a single Louisiana representative and senator has voted against raising the monthly pension checks for most of the state’s retirees.

But the bill that passed the full House on Monday 92-0 is not the same as the version that passed the Senate 35-0 on April 13.

The differences between the House and Senate measures would have to be worked out — both chambers must agree on the exact language — before any cost of living adjustments could be approved and sent to the governor for his signature.

The cost of living adjustment, for about 125,000 retirees beginning on July 1, in Senate Bill 2 is conditioned on the passage of two other bills that tweak how the retirement system funds retirements and pays for administrative costs. House Bill 32 carries no conditions and would simply raise the benefits.

“The key point,” said Rep. Sam Jones, the Franklin Democrat who sponsored HB32, “is we have consensus to pass a COLA.”

HB32 and SB2 would give retired state workers and public school teachers over the age of 60 a 1.5 percent increase. Retirees in the systems that handle the pensions for State Police employees and public school workers over the age of 60 would receive an increase of about 2 percent.

The average monthly increase would be about $30 but could vary based on the circumstances of individual retirees and the retirement systems to which they belong. It would be the first cost of living adjustment in two years for many retirees. For others, it’ll be the first raise in benefits in at least eight years, Jones said.

The state is in a fiscal crisis and is still looking at a budget deficit of about $600 million for the fiscal year that begins July 1, without any real plan to bridge that gap short of draconian cuts to hospitals, higher education institutions and possibly not funding the college tuition-paying Taylor Opportunity Program for Students, or TOPS, for more than 30,000 students already qualified for the scholarships.

But the money would come from an account where excess investment earnings were deposited and the $385 million ultimate cost would not impact the state budget. The money in the funds cannot legally be used for other state expenses.

Part of the reason for the $20 billion debt issue involving retirement accounts is the COLAs granted over the years. Generally, the additional dollars were tacked onto the debt, which state government didn’t adequately fund.

Two years ago, Act 399 set criteria that allowed cost of living adjustments every other year, provided enough money was in the excess investment accounts and the systems hit predetermined levels of funding. Part of the criteria is inflation, which last year was below the amount needed to trigger the increased benefit.

Both Jones and Sen. Barrow Peacock, who sponsored SB2, acknowledge that the federal consumer price index last year wasn’t high enough. However, they argue, the cost of health care and food, on which seniors spend most of their money, rose last year, while the collapse of energy prices drove down the official inflation rate. If looking at the rise in consumer prices over the past two years, the inflation rate is plenty high enough, both Jones and Peacock said.

While Jones’ House bill puts no conditions on the adjustment, Peacock’s Senate Bill 2 would grant a COLA only if two other measures also are approved.

A Shreveport Republican who chairs the Senate retirement panel, Peacock said during an interview moments before the House vote that he still wants to link the cost of living adjustment to his two other bills. Senate Bill 18 would tinker with how the retirement systems are funded, and Senate Bill 5 would require administrative costs to be paid annually rather than rolled into the long-term debt.

“The important thing is to help the long-term soundness of the retirement system,” Peacock said.

Jones said he is OK with the two measures attached to Peacock’s cost of living adjustment bill. But the two of them haven’t yet met to decide how best to proceed.

All three Senate bills are scheduled for a hearing Thursday before the House Retirement Committee.

HB32 now goes to the Senate, where it’ll likely be assigned to Peacock’s committee for a hearing.

Original article here.