State to study pension changes

• By SARAH CHACKO
• Advocate Capitol News Bureau
• Published: Oct 18, 2009

• Print
• Email
• Save
• Reprints
• Twitter
• Share

• Del.icio.us
• Digg
• Facebook
• Reddit
• 

State retirement officials will begin studying on Monday the possibility of changing the state’s public retirement system to a plan that no longer guarantees lifelong benefits for state employees.

Currently, state employees and teachers participate in plans that the government guarantees to provide lifelong benefits based on years of service and salary, called defined-benefit plans.

A meeting of the state House and Senate Retirement committees will be looking at defined-contribution plans, which are similar to 401(k)s and require employees to manage their own investments. Employees retire with what they and their employer contribute to the system, along with investment earnings or losses.

The meeting starts at 10 a.m. Monday in the State Capitol.

“I don’t see a vote being taken. But I do think we will get a good summary of the pros and cons on the two types of plans,” said House Retirement Committee Chairman Joel Robideaux, No Party-Lafayette.

The meeting is based on a study resolution by House Speaker Jim Tucker, which seeks to determine the feasibility of establishing a defined contribution plan for all new employees hired on and after July 1, 2010, in the four state public retirement systems.

Current employees and retirees would not be affected by any plan changes.

“This is more about managing risk both at the state budget level and, just as importantly, at the retirement system level,” said Tucker, R-Terrytown.

Experts are scheduled to discuss aspects of both plans.

Officials with the two largest Louisiana systems, which hold the plans for teachers and state employees, defend the defined benefit plan.

“The issue on a defined contribution plan is, where are you at, at the time you have to retire?” said Maureen Westgard, director of the Teachers Retirement System of Louisiana.

Stock market crashes, industry “bubble” bursts, and catastrophic events can make investments fluctuate, for retirement systems and individuals alike, Westgard said.

“A lot of people have to put off retirement or it takes longer for them to catch back up,” she said.