Louisiana Senate Bill SB2

Louisiana 2020 Regular Session

• Introduced: 1/21/20
• Refer: 1/21/20
• Refer: 3/9/20

Caption

Provides for optional membership for persons first hired at a certain age, with additional restrictions. (7/1/20) (OR DECREASE APV)

Impact

The bill is expected to reduce the number of new members enrolling in the TRSL, as some will choose not to join if given the option. This could lead to a decrease in future pension liabilities for the system due to lower participation rates. The estimated actuarial costs associated with this bill indicate a trend towards decreasing net costs for both the retirement systems and other post-employment benefits (OPEB). However, costs associated with administrative changes may arise, though they are anticipated to be manageable within the existing budget of TRSL.

Summary

Senate Bill 2 (SB2) proposes significant changes to the Teachers' Retirement System of Louisiana (TRSL) by allowing certain new teachers the option to not join the system based on their age at the time of employment. Specifically, teachers who are 60 years of age or older, as well as those who are 55 years of age or older with sufficient Social Security credits, will not be mandated to enroll in TRSL. Instead, they will have a one-time irrevocable choice to opt into the system. This represents a shift from the current law, which generally requires all teachers to become members of TRSL upon employment.

Sentiment

Legislative discussions around SB2 exhibit a mixed sentiment. Supporters claim that the bill promotes flexibility and acknowledges the varying needs of educators at different life stages, advocating for a more adaptable retirement system. Conversely, opponents express concerns that this legislation could undermine the long-term stability of the retirement system, ultimately affecting the security of future retirees. They argue that reducing mandatory enrollment may jeopardize the financial health of the retirement system, as fewer contributions may lead to insufficient funding.

Contention

A notable point of contention is whether giving older teachers the option to opt-out of TRSL membership will create disparities in benefits among educators, particularly those who are closer to retirement age versus younger teachers. Proponents of the bill argue that increasing options respects individual circumstances, while detractors worry it may erode the collective strength and fund balance of the system, risking underfunding in the long run. Critics also fear the possibility of fueling a trend towards a decline in coverage among educators entering the teaching profession.