Jindal offering tweaks to his retirement bills


Associated Press

BATON ROUGE, La. (AP) - Gov. Bobby Jindal is agreeing to make changes to his proposals to overhaul pension benefits for thousands of state workers, after facing resistance from lawmakers and constitutional questions about some of the ideas.

Jindal's deputy chief of staff, Kristy Nichols, discussed the proposed changes Friday, though she defended the constitutionality of the bills as they were originally filed last month.

"We're open to improving the bills. We're open to compromise," Nichols said. "These changes still reach the goal we want, which is to create a more sustainable system."

Jindal wants to increase the contribution rate charged to state workers and public college employees for their retirement from 8 percent to 11 percent of their pay. He also wants to push the retirement age back to 67 for a person to receive full benefits, calculate the monthly retirement payment on an employee's last five years of salary instead of three years and create a cheaper type of pension plan for new employees.

The retirement proposals haven't been set for hearing as lawmakers haggled behind the scenes with the Jindal administration about their concerns.

In the hopes of gaining more support for the bills, Jindal is suggesting tweaks to his original proposals on the 3 percentage point contribution rate hike and the retirement age delay. Nichols said the Republican governor will oppose attempts to make the bills apply only to new employees hired after they take effect, however.

Rather than use the money from the contribution increase to cut costs at state agencies, Nichols said the governor will support an amendment that would apply the money generated from that increase to pay down the state's multibillion-dollar retirement debt.

That could address criticism that the change would be a payroll tax, rather than an assist for the retirement system. But it will create budget headaches for lawmakers, since Jindal proposed a budget for next year that assumed the state agencies would save money on retirement costs. Lawmakers will have to rework the spending plans.

Meanwhile, in the proposal to push back the retirement age to 67, Nichols said the governor will seek amendments so that the change wouldn't retroactively impact employees and shrink the benefits they had already earned under the existing pension system. Critics have said diminishing benefits already accrued by employees is unconstitutional.

Nichols said Jindal will seek to make the increased retirement age a two-pronged approach.

Employees would be able to retire as early as 55 years old - as they are currently, depending on their years of service - with full retirement benefits based on the contributions that have been made into the retirement system already. Any additional benefits accrued after the bill would take effect could only be collected at a full rate at age 67 and older. If an employee sought to collect those additional benefits sooner, they would be at a reduced rate.

Anyone who is 55 years old or older wouldn't be forced to switch to the new, later retirement age.

None of the proposals pushed by Jindal would change the retirement costs or benefits of public school teachers and law enforcement workers.

Jindal has said the retirement changes would help cut the costs of pension programs that are more than $18 billion short of the funding they'll need to pay for all the benefits promised. He said the costs of retirement threaten to eat into funding for colleges and health care services unless they are reined in.

"We're drowning in debt, and our pension systems are unsustainable," Nichols said Friday.

Opponents, including leaders of the state employee retirement system, call the proposals illegal, saying they break agreements made with employees when they were hired and run contrary to the guarantees protecting public pension benefits in the Louisiana Constitution.

Nichols said the Jindal administration also will ask lawmakers to include the governor so that he too would face a 3 percentage point increase in his retirement costs. He currently pays 11.5 percent of his annual salary toward retirement, which has more generous benefits than rank-and-file workers. That cost would go to 14.5 percent.

Other statewide elected officials wouldn't have to increase their retirement contributions, however.



House Bills 53, 55 and 56 and Senate Bills 42, 47, 51 and 52 can be found at www.legis.state.la.us.

(Copyright 2012 by The Associated Press. All Rights Reserved.)