According to the AP, the system’s board of trustees will ask the Louisiana Legislature to change the calculation method that determines employer payments. The Advocate newspaper of Columbus, Indiana, states the change would end up lowering the percent of payroll the state would contribute into the system in the fiscal year that begins July 1.
Louisiana state law requires LASERS to use a “projected unit credit” for each year the pension benefit accrues for funding purposes. In projecting actuarial costs, the normal cost is a lower percentage of salary in early years of service. The normal cost increases annually as each member approaches retirement eligibility, states the article.
The proposal would move to what is called an “entry age normal” method under which normal cost is generally level as a percentage of payroll over the pension system member’s career.
LASERS Director Cindy Rougeou said the simple law change would “free up real dollars” that the state could use to help reduce the LASERS unfunded accrued liability or long-term debt.
LASERS administers pension plans covering more than 150,000 employees, retirees and their families, and includes approximately 55,000 active employees.