TRSL Update. Higher Education Professional Group - Quarterly Meeting March 29, 2012

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1 TRSL Update Higher Education Professional Group - Quarterly Meeting March 29, 2012

2 Convened Monday, March 12 Final adjournment Monday, June 4 (no later than 6 pm) 2

3 The following legislation affects the benefit structure of active members of TRSL employed in higher education and active rank-and-file state employees. 3

4 RETIREMENT AGE HB 53 (Rep. Pearson) & SB 51 (Sen. Guillory): Raises the retirement age to 67 or highest Social Security age Exempts current employees who reach age 55 before July 1, 2012 Effective June 30, 2012, for all employees not eligible to retire by October 1, 2012 Members eligible to retire by October 1, 2012, may do so under current eligibility provisions 4

5 FINAL AVERAGE COMPENSATION (FAC) HB 55 (Rep. Pearson), SB 42 (Sen. Cortez) & SB 47 (Sen. Guillory): Raises final average compensation (FAC) from three years to five years - Effective June 30, 2012, for all employees not eligible to retire by October 1, Members eligible to retire by October 1, 2012, may do so under a three-year FAC 5

6 CONTRIBUTION RATE HB 56 (Rep. Pearson) & SB 52 (Sen. Guillory): Increases employee contribution rate by 3 percentage points (from 8% to 11%) Effective July 1,

7 CASH BALANCE PLAN HB 61 (Rep. Pearson) & SB 53 (Sen. Guillory): Mandatory for TRSL post-secondary employees hired on or after January 1, 2013 Current defined benefit members may join Cash balance account credited with 12% (employee=8%) Interest paid annually at actuarial rate less admin fee Employee account not debited for investment losses Investments managed by TRSL Vested at five years 7

8 DEFINED CONTRIBUTION PLAN SB 17 & SB 26 (Sen. Peacock): (Constitutional amendment and companion legislation) Mandatory for TRSL post-secondary hired on or after January 1, 2013 TRSL Board selects up to three DC providers Employee contribution: 10% Employer contribution: 5.25% Benefits payable by DC provider, not state Vested at five years (entitled to employer contributions and interest) 8

9 Other legislation affecting TRSL and its membership. 9

10 DEFINED CONTRIBUTION PLAN HB 985 (Rep. Jeff Thompson): Mandatory for all new hires/re-employed on or after January 1, 2013 TRSL Board selects up to three DC providers Employee contribution: 10% monthly Employer contribution: 5.25% monthly Benefits payable by DC provider, not state Vested at five years (entitled to employer contributions and interest) 10

11 RETIREMENT SYSTEM MERGER HB 60 (Rep. Pearson), SB 56 (Sen. Guillory) & SB 46 (Sen. Cortez): Merges administration of TRSL and the Louisiana School Employees Retirement System (LSERS) Separate plans exist under combined system (TRSL) Abolishes LSERS Board TRSL food services trustee to represent LSERS members on TRSL Board Eliminates 40 positions within one year 11

12 TRSL MEMBERSHIP AND BOARD COMPOSITION SB 45 (Sen. Guillory): Transfers certain public school employees paid from school food service funds from TRSL to Louisiana School Employees Retirement System (LSERS) SB 54 (Rep. Pearson) & SB 48 (Sen. Guillory): Adds Commissioner of Administration (or designee) to the TRSL Board 12

13 DROP CONTRIBUTIONS (EMPLOYER) SB 33 (Sen. Guillory): Provides that employer contributions will continue during an employee's participation in DROP for TRSL and certain other state and statewide retirement systems employers, beginning July 1, Bill directs PRSAC to meet to adopt a revised valuation, with revised employer contribution rate. 13

14 DROP PARTICIPATION HB 1004 (Rep. Talbot): - Provides that any member of the system who completed DROP on or before Dec. 31, 2011, is eligible to make a one-time, irrevocable election to rescind participation, provided he meets certain conditions. - Member is responsible for any actuarial impact of a rescission. 14

15 RETURN TO WORK HB 14 (Rep. Talbot): Suspends benefits for re-employed retirees of state and statewide retirement systems who retire from such systems on or after July 1, 2012, and return to work in a position covered by any state or statewide system. HB 19 (Rep. Hoffmann): Expands definition of "retired teacher" in the TRSL return-to-work law to include retirees who are re-employed as substitute, K-12 classroom teachers. Earnings shall not exceed 25% of benefit during fiscal year. Benefits are reduced by any amount in excess of the 25% limit. Suspends benefits for retired members re-employed through contract or corporate contract 15

16 RETURN TO WORK HB 20 (Rep. Hoffmann) & SB 20 (Sen. Cortez): Expands the definition of "retired teacher" in the TRSL return-to-work law to include adjunct professors returning to active service. Provides definition of adjunct professor. Adjunct professor earnings cannot exceed 25% of benefit during any fiscal year. Benefits are reduced by any amount in excess of 25%. 16

17 RETURN TO WORK SB 19 (Sen. Cortez): Removes retirees who retired on or after May 1, 2009, and on or before June 30, 2010, and return to work in a position required a valid Louisiana teaching or ancillary certificate from the definition of "retired teacher" in the TRSL return-to-work law. Expands the definition of "retired teacher" in the TRSL return-to-work law to include retirees who are re-employed as substitute, K-12 classroom teachers. Earnings shall not exceed 25% of benefit during fiscal year. Benefits are reduced by any amount in excess of the 25% limit. Suspends benefits for retired members re-employed through contract or corporate contract 17

18 ALLOCATION OF NORMAL COST SAVINGS HB 860 (Rep. Greene): Proposes to amend the constitution to direct the state treasurer, beginning in fiscal year and each year thereafter, to calculate the difference between the employer normal cost in effect for a state retirement system for the given fiscal year and the employer normal cost in effect on January 1, Provides that if savings to the state general fund result from the difference between the two rates, an amount equal to such savings shall be transferred by the treasurer directly to the state retirement system. Such funds cannot be used, directly or indirectly, to fund COLAs. Proposed to be on the November 6, 2012 ballot. 18

19 FORFEITURE OF BENEFITS HB 9 & HB 10 (Rep. Ligi): (Constitutional amendment and companion legislation) Requires forfeiture of retirement benefits by public officials and employees (hired or beginning service on or after January 1, 2013) who are convicted of felony acts associated with and committed during their positions. Authorizes the Legislature to apply dollar amount of forfeited benefits toward the system's unfunded accrued liability (UAL). HB 42 & 43 (Rep. Champagne): (Constitutional amendment and companion legislation) Requires forfeiture of public retirement benefits for any person who is a member of a public retirement system, and who is convicted of a felony associated with his service in any public office or position. 19

20 Any Any Questions? Phone: Toll-free: (1-877-ASK-TRSL) Website: 20