The Louisiana State Employees Retirement System (LASERS) is no longer hot on the creation of a new pension plan for rank-and-file members, falling more in line with Gov. John Bel Edward’s opposition to the bill the new plan, which he criticizes for trimming benefits.
Although the bill had advanced through two Senate committees and awaits final passage on the Senate floor, the $11 billion pension plan decided on Monday it would no longer pursue the measure.
“In Louisiana, our state employees do not participate in Social Security,” a LASERS spokesperson told CIO. “However, the administration has requested that we conduct additional study before moving forward and we have agreed.”
With a current funding status of 63%, the plan had initially backed the bill because it would have provided a form of Social Security for 70% of its members that won’t qualify for a lifetime benefit.
The bill is sponsored by Senate Retirement Chairman and Republican Barrow Peacock.
Supporters of the proposal touted the move would reduce pension debt buildup while giving state workers a more portable type of retirement benefit as well as a clause that put cost-of-living adjustments into the new plan. The provision would allow for workers who left the state payroll before retirement eligibility to move the benefit option on a sliding scale for the first four years.
According to the state data lab, Louisiana is experiencing a $9.5 billion pension deficit.
Meanwhile, Edwards, a Democrat and opponent of the proposal, argued that the measure would reduce benefits while raising the costs for workers. Additional concerns raised by detractors was the $10 million-plus in upfront costs to the state over the first five years as well as transferring more of the cost risks to employees.
Treasurer John Schroder, a Republican, was unhappy with both Edwards’ opposition as well as the retirement system’s decision to shelve the proposal, as he claimed the bill would have created “a better structure and long-term outcomes” for state employees and the retirement system.
“This is why the public doesn’t trust government,” he said in a statement.
The pension bill would have put workers hired on or after Jan. 1, 2020, into a 401(k)-style plan while also raising the retirement age to 65 from the current 60-62. Employees hired on or after July 1, 2006, would be given a window to opt into the new plan.
Law enforcement or other hazardous-duty positions, judges, teachers, or public school employees were to be excluded from the shift to the new pension plan.
Both the Senate and House are Republican-controlled. Considering that the bill is awaiting final passage, it is expected to pass regardless of the state pension system’s involvement.