The number of people leaving state jobs and pulling their money out of the Louisiana State Employees Retirement System is on the increase.
“We are seeing a big uptick because of the number of (state employee) layoffs going on,” LASERS Assistant Director Trey Boudreaux said. “Or they are just leaving state service and cashing out.”
LASERS statistics show from July through October 2011, pension system members withdrew $13.47 million. The statistics for the same four months this year show a rise to $16.39 million.
In October, the most recent month for which information is available, refunds hit $4.44 million. In October 2011, the refunds totaled $2.7 million.
Previously a lot of workers leaving state employment left money in the retirement system thinking that one day they would return to state service, Boudreaux said. That trend is changing for those LASERS members who have not become retirement eligible. Instead, they are taking their pension system contributions when they leave, he said.
The increase comes at a time when Gov. Bobby Jindal’s administration has moved to downsize state government and transfer some traditional public services into private sector operation. The state employee work force has dropped as the actions have been taken, particularly in the health-care and corrections arena.
Nearly 1,000 rank-and-file state employees have lost their jobs since July — the same four months covered in the LASERS report when the pension withdrawals occurred. The state Civil Service work force has declined nearly 3,200 since Jindal took office in 2008.
LSU has announced plans for a 1,500 employee layoff in its hospital system effective Jan. 21.
In addition, Jindal pushed a major retirement system revamp in the 2012 Legislature that would have required state employees to contribute more while working longer for fewer pension benefits. The initiatives affecting current employees died even after substantial rewriting.
A new 401(k)-style pension system won approval for new hires after July 1, 2013. The so-called “cash-balance” plan is the subject of a lawsuit that contends the measure did not get the required vote in the House to become law.
Refunds are on a pace to be the highest number in the past five years, according to a LASERS report. In fiscal year 2009, refunds totaled $23.07 million. The amount climbed to $37.7 million in the fiscal year that ended June 30. In the current fiscal year, the refunds total $16.39 million — some 40 percent of last year’s total in just four months.
“What we are seeing is a shift in the amount of refunds, somebody choosing to leave the system and pulling their money out,” Boudreaux said. “We have seen more money going out the door where traditionally we keep it and invest it ... On the other hand we are not paying benefits to those people.”
Boudreaux said the increase in refunds will be something that the system’s actuary will look at as a trending condition as she looks at the impact on LASERS’ financial situation just as would the impact of a lack of pay raises on retirement benefits and state employees’ retiring earlier and drawing benefits.