SETTING THE RECORD STRAIGHT ON JINDAL'S RETIREMENT PLAN

Jan 26, 2012--3:03 PM CDT

Each of these in its own right is a rationale for reform and it's critical the public be aware of these facts. The bottom line is that pension reform must happen. Louisiana could wait for another Governor or Legislature to take on this issue, but the longer we wait the more rising retirement costs will force reductions in critical services, increase debt for future generations, and leave workers without retirement benefits they've earned. Governor Jindal' responsible plan for pension reform keeps Louisiana's promise to state workers by creating a sustainable approach that protects those at or near retirement and providing new hires with a modern, portable, investment account which can only increase in value. What You Didn't Read In MOST Stories On Governor's Jindal's Pension Reform Plan:

- State retirement costs have quadrupled over the past two decades from $478 million to $1.9 billion today.

- Without reform, Louisiana taxpayers who are already spending nearly $2 billion on state retirement just this year, could see an additional $3 billion or more added to the UAL by the end of the decade.

-In 1987, both state employees and university employees were responsible for over 40 percent of the cost of supporting their retirement systems. Today they carry just 25% of the burden, passing the rest on to taxpayers.

- The Governor's proposal increases the employee contribution rate by 3%. This change would mean state employees would be contributing one-third or less of the cost to support the retirement system. A 3% increase is significantly less than the 7% increase in payroll costs the state has incurred in the past few years.

- Both LSERS & TRSL have an especially high ratio of staff to members. LSERS has a plan to participant staff of 681 to 1. TRSL has a ratio of 1,036 to 1. The average for university and government plans is 3,945 to 1. Merging LSERS & TRSL will improve the ratio of staff to beneficiaries.

- Today, LSERS has particularly high administrative costs of $172 per member. That is well above the national benchmark of $101 per member. Merging LSERS & TRSL will streamline administrative costs and take advantage of economies of scale.

- In the private sector, just 20 percent of workers nationally have a defined benefit plan. Other states are already moving toward defined contribution or mixed defined contribution and defined benefit plans.

Governor Jindal's reform proposal modernizes our retirement system, increases portability, and brings it closer to national norms. In Today's Advocate & Times-Picayune, Important Elements Of Governor Jindal's That Protect Workers At Or Near Retirement Went Unmentioned:

- Governor Jindal's plan protects workers near retirement. Anyone eligible to retire now will be able to do so without any reduction in benefits. The retirement age change will not impact anyone 55 or older. Anyone who wants to retire earlier under the existing provisions can do so with an actuarial reduction in benefits.

The Advocate, Associated Press, And Times-Picayune Also Do Not Mention An Important Component Of The Cash-Balance Plan For New State Workers:

- While the AP and Times-Picayune do mention that new hires would have the benefit of earned interest on their retirement contributions, none of the papers mention that this investment account can never lose value and can grow in value when market conditions are good. According to actuarial modeling, this type of plan will provide a benefit at least as generous as Social Security when market conditions are bad, and a far better benefit when market conditions are good.

Aaron Baer

Deputy Director of Communications

Office of the Governor