One of Jindal's retirement proposals gets last-minute detour

Published: Thursday, May 24, 2012, 7:51 PM     Updated: Thursday, May 24, 2012, 7:52 PM

By Jeff Adelson, The Times-Picayune

BATON ROUGE -- A proposal to enrol newly hired state employees in a 401(k)-style plan was blocked Thursday from final passage to Gov. Bobby Jindal's desk, forcing the measure into a conference committee. House Bill 61 by Rep. Kevin Pearson, R-Slidell, came five votes short of the 53 it needed for approval, which means a group of representatives and senators must now meet to come up with a joint version of the bill.

Pearson argued that the measure is necessary to prevent the growth of the now more than $18 billion gap between the amount of money in the state retirement systems and what is needed to pay out employee benefits.

But opponents said the system could be perilous for state employees, who are not enrolled in Social Security and thus would not be protected by that safety net.

"This will put us in the place of being the only state in the nation with a stand-alone cash balance retirement system," Rep. Sam Jones, D-Franklin, said. Jones also attacked the proposal as providing a smaller benefit for employees while potentially requiring the state to pay more.

The measure, which would not go into effect until July 2013, would put new employees into a cash balance plan rather than a traditional pension. Under that system, employees would contribute 8 percent of their salaries toward a retirement account and the state would contribute at least 4 percent of the employee's salary to the account. The investment accounts would be managed by the existing state retirement systems.

In years when there are gains on the investments, employees would be credited for most of those improvements. In years when the investments lose money, the employees accounts would not decrease. Money to keep the balances from decreasing would come from some money set aside during years when the investments improved and any additional money needed would come from the state.

Employees would be able to roll over those accounts to another retirement fund if they left state employment.

Teachers and hazardous-duty workers would remain in the traditional pension system.

Jindal Communications Director Kyle Plotkin noted that some representatives were absent during Thursday's session and said the bill would have enough votes to pass after it got out of conference committee.

On the House floor Thursday, representatives voted against a measure that would have all but killed the bill by setting it aside and requiring a two-thirds vote before it could be discussed again.

Jeff Adelson can be reached at jadelson@timespicayune.com or 225.342.5207.