House panel OKs faculty pension fix House panel OKs faculty pension fix Kevin Pearson Marsha Shuler| email@example.com March 28, 2014 Comments Colleges and universities would be required to increase the contributions they make toward faculty pensions under legislation approved Thursday by a Louisiana House panel. House Bill 6, as amended in committee, would require the employer contribution to what is called the Optional Retirement Plan to reach 6.2 percent by 2018. It is the same amount private employers are required to contribute toward Social Security but less than what other public universities and colleges in the U.S. pitch in to the retirement plans for, primarily, their faculty. As an employer, the state of Louisiana contributes the least of any public education employer in the country. The state contributes 3.66 percent of the employee’s pay to the retirement fund. The employee contributes 8 percent. Higher education leaders have complained that the state’s poor contribution rate deters recruiting and keeping faculty. In most cases, faculty are not members of Social Security, so the ORP is their only retirement. “Although we would still be the lowest in the nation at 6.2 percent, that is something we need to strive to reach,” said bill sponsor state Rep. Kevin Pearson, R-Slidell. ORP is an alternative to the Teachers’ Retirement System of Louisiana’s traditional defined benefit plan. Employee and employer contributions are invested by a private carrier in options chosen by the individual pension system member. The performance of the individual’s investment determines the retirement benefits due. The plan is popular among academics because they can carry the pension plan to most other U.S. colleges and universities. Pearson’s original HB6 would have required higher education institutions to go to the 6.2 percent in the coming year. He said he moved to the phase-in after some in higher education expressed concern that the increased cost could lead to campus employee layoffs. The altered bill would set a floor of 3.66 percent. Under the change, each higher education board would have authority to set the contribution rate for its institutions at “whatever the system needs to do to attract top employees,” Pearson said. They must hit the 6.2 percent target by 2018, he said. “I’m trying to give you a bill that will pass. The bill will die somewhere if I force higher education to do the 6.2 percent now,” said Pearson. “It’s an additional cost to higher ed. Their budgets are tight.” The optional plan is popular among those in the academic arena because it is portable to most other U.S. colleges and universities. Forty-six percent, or 7,136, of higher education employee members of the Teachers’ Retirement System of Louisiana participate in the optional plan. Nearly half of them, 3,576, are in the LSU System. Another 2,673 are from the University of Louisiana System, 559 in the Louisiana Community and Technical College System and 296 in the Southern University System.