La. Senate panel OKs retirement change for workers

Louisiana Gov. Bobby Jindal’s proposal to create a new retirement plan for future rank-and-file state workers advanced today to the full Senate for debate after getting the support of the Senate Retirement Committee. The proposal would create a cheaper investment account, similar to a 401(k) plan, for state employees hired after July 1, 2013, instead of a monthly retirement payment based on their salaries and years of employment. Supporters say the new system would help shrink the growth in the costs of pension programs that are more than $18 billion short of the funding they’ll need to pay for all the benefits promised. Critics of the new “cash balance” plan say it could leave workers without enough of a safety net, since Louisiana state employees aren’t part of the Social Security system. They noted the only other state that has a cash balance plan for its workers, Nebraska, also includes them in the Social Security system. The cash balance bill by Rep. Kevin Pearson, R-Slidell, narrowly received the backing of the House earlier this month. If it gets approval from the full Senate, the measure would have to go back to the House for review of Senate changes. Financial analysts disagree widely on whether the retirement plan change for new employees would cost or save the state money. The cash balance plan would not apply to law enforcement workers and others considered hazardous-duty employees. It also would not apply to public school teachers, unless they chose to opt into the program.