The Louisiana Legislature signed off Wednesday night on Gov. Bobby Jindal’s proposed new pension system plan for future state employee hires.
Approval came amid continuing complaints that the 401(k)-type plan will not provide financial security for employees and end up costing the state.
“We are telling a generation we are going to set up something for you where you are going to be worse off then the generation who proceeded you,” said state Rep. Sam Jones, D-Franklin.
Proponents, such as House Speaker Chuck Kleckley, countered that the state pension system is broken and putting too much of a financial drain on the state budget.
“This bill helps correct some of those challenges,” said Kleckley.
The measure, House Bill 61, is the first of Jindal’s proposed pension system revamp package impacting the benefits of current, future and retired state employees to go to the governor’s desk for signing into law.
Final legislative approval came as the Senate, then the House agreed to a conference committee report to resolve differences between the two chambers. HB61 came out looking the same as it entered conference committee.
The Senate gave quick approval on a 26-8 vote.
Then, the House voted 67-37 for the measure after opponents failed to scuttle the bill for the current legislative session.
The measure would move state employees, including those in higher education, who are hired beginning July 1, 2013, into a cash balance retirement plan. Contributions from employees and from employers — state government agencies — would be invested by state retirement systems, with individual accounts credited with investment earnings each year.
The plan would differ from traditional private-sector 401(k)-type plans because the employee accounts would be protected from losses.
State employees today have a “defined benefit” plan with guaranteed lifetime benefits based on years of service and compensation. Jindal contends that is too expensive for the state.