By Marsha Shuler
Capitol news bureau
October 12, 2012
The Jindal administration is asking a state district court judge to dismiss a lawsuit challenging the constitutionality of a new pension plan for future state employees.
The legal response claims that the Retired State Employees Association and individual plaintiffs do not have standing to file the lawsuit and contends the law was legally approved by the 2012 Legislature.
Gov. Bobby Jindal’s outside counsel asserts that those filing the lawsuit are not impacted by the change.
“The Retiree-plantiffs do not have a real and present interest in the action sufficient to show they are entitled to challenge the constitutionality of the Act,” according to the governor’s response.
“Plaintiffs have alleged no fact sufficient for this court to substitute its judgment for that of the legislature, and they cannot,” Jindal outside counsel Elisabeth Quinn Prescott wrote.
The retirees group contends the law establishing a 401(k)-type pension plan for future state employees did not get the two-thirds vote the Louisiana Constitution requires.
The case is assigned to state 19th Judicial District Court Judge William Morvant of Baton Rouge.
Retiree association executive director Frank Jobert said those filing the lawsuit do have legal standing.
“Anybody in the state can challenge the constitutionality of any law,” Jobert said Thursday.
Jobert said the constitutional requirement for a two-thirds vote on legislation that drives up pension system expenses is in place to protect the state and its taxpayers who must cover a lot of the cost.
The Louisiana House did not approve by a two-thirds vote the “cash balance” plan, which its own actuary advised had a cost factor, Jobert said.
“We are not challenging anything to do with the merits of the law, just the way in which it was passed,” Jobert said. “It’s a safeguard for the system so new benefit structures don’t end up costing the taxpayer more ... We are taxpayers of Louisiana. We can challenge it on that basis alone.”
The cash balance plan for future nonhazardous-duty employees won approval in the 2012 legislative session.
The new hire plan — scheduled to go into effect July 1 — would operate similar to a private sector 401(k) except funds would be protected from investment losses.
An employee would contribute 8 percent of pay and the employer — the state — 4 percent with all but 1 percent of the investment earnings attributed to the account. The 1 percent would be set aside in a reserve fund as a hedge against investment losses.
The Louisiana State Employees Retirement System opposed the plan, contending it would not provide sufficient retirement income for state employees who have no Social Security safety net.
Jindal argued that the plan would help stem increasing state retirement system financial liabilities while providing a sustainable pension benefit for employees.
Today’s defined benefit plan guarantees lifetime benefits at a certain level based on years of employment and salary.