Public retirement system taxing on La.
Louisiana’s generous retirement system for public employees is unaffordable and will ruin the state unless major reforms are enacted.
Some legislators are starting to grasp that reality, with a proposal to curb some retirement benefits making progress in the House. But half-measures won’t solve the problem, and lawmakers need to push for more consequential reforms in this session.
The House Retirement Committee advanced House Bill 1337 by Rep. Joel Robideaux, which would cut benefits for new hires starting next year.
The bill would expand from three to five years the period used to calculate benefits. The three-year period has allowed some employees to spike their pensions with a sudden increase in pay, to the detriment of taxpayers. …
Just as important, the bill would raise the minimum age for receiving retirement benefits, though only for new hires. The bill would save taxpayers only $2.7 million in its first year, but 10 times that much in the fifth year and eventually as much as $75 million a year.
That’s a step in the right direction, and lawmakers should adopt this bill. But this is only a modest move, considering taxpayers already face a $12 billion debt in the state retirement system, and the amount continues to grow.
A real reform would be to adopt a proposal by House Speaker Jim Tucker to place all new public employees in a defined-contribution retirement plan similar to the 401(k) plans prevalent in the private sector. That would still give future public employees retirement benefits without exposing the state to fiscal ruin.
Defenders of the current retirement system argue that state employees deserve guaranteed pensions because they earn modest salaries. Compensation figures collected by the U.S. Department of Labor contradict that, showing that public employees as a group earn as much or more than workers in the private sector. And unlike public employees, most Louisianians don’t have a guaranteed retirement at their workplace.
To ask Louisiana taxpayers to continue paying for guaranteed pensions for tens of thousands of public employees is not only unfair, it’s unsustainable.
– The Times-Picayune, New Orleans