The Louisiana Legislature is on its way to suspending the July 1 implementation of the Jindal administration’s 401(k)-type pension plan for new state employee hires.
The state Senate Retirement Committee on Monday — without administration objection — approved Senate Concurrent Resolution 1 which would delay the plan’s start until July 1, 2014.
The resolution cannot be vetoed by the governor.
State Sen. Page Cortez, R-Lafayette, said he sponsored the resolution because of significant questions yet to be answered about what is known as the “cash balance” plan.
Cortez said a constitutional challenge of passage of the measure is pending before the Louisiana Supreme Court and an IRS ruling is pending on whether the plan provides a benefit equivalent to Social Security.
If “cash balance” is not equivalent, the employee would have to be enrolled in Social Security too at added expense.
Cortez said it would be prudent to delay, “before we make a mistake let’s just wait and implement it correctly.”
The resolution had the support of the Louisiana State Employees Retirement System and the Teachers’ Retirement System of Louisiana.
Only higher education members of the Teachers’ Retirement System would be required to join the cash-balance plan.
Cortez said the resolution was not submitted at the boards’ request.
“I just thought it was the right thing to do,” he said.
The cash balance plan was the only major piece of a retirement package that Gov. Bobby Jindal proposed last year that won legislative approval.
Other bills affected current employee benefits and were shelved during the legislative process. Controversy surrounded the cash balance plan’s passage as opponents said the measure constitutionally required a two-thirds vote. The administration said there was no additional cost and only required the majority vote the legislation received. A state District Court judge ruled it was unconstitutionally passed. The issue is before the state Supreme Court.
The governor’s Division of Administration is seeking a Social Security equivalency determination but that is expected to take some time.
The pension system actuary has submitted documents indicating it would not be a Social Security equivalent for many.