Cash balance plan postponed

A Louisiana House committee on Thursday signed off on a year’s delay in implementation of the Jindal administration’s 401(k)-type retirement plan for new state employee hires.

The House Retirement Committee, without objection, sent House Concurrent Resolution 2 to the House floor for further consideration.

The administration initially opposed the delay but has dropped the fight.

A similar measure cleared the state Senate Retirement Committee last week.

HCR2 would suspend implementation of the so-called “cash balance” plan until July 1, 2014. A suspension resolution, under the state constitution, cannot be vetoed by the governor if passed by the Legislature.

The cash balance plan is the subject of a constitutional challenge over whether it received sufficient votes for passage. The issue is pending before the Louisiana Supreme Court. In addition, there are questions about whether it offers an equivalent benefit to Social Security. If it doesn’t meet the test, the state and employees would face paying not only state pension contributions but Social Security as well.

Prior to approving HCR2, the panel adopted an amendment by the measure’s sponsor state Rep. Joe Harrison, R-Houma, to make it mirror a suspension resolution approved last week by the Senate Retirement Committee.

Stripped from Harrison’s resolution was a provision that would have required a determination of whether it was a qualified plan under IRS regulations.