2006 Louisiana Laws - RS 11:542 — Employee experience account

§542.  Employee Experience Account

A.(1) Effective July 1, 2004, the balance in the Employee Experience Account shall be zero.

(2)  The Employee Experience Account shall be credited as follows:

(a)  To the extent permitted by Paragraph (3) of this Subsection, an amount not to exceed fifty percent of the prior year's net investment experience gain as determined by the system's actuary.

(b)  To the extent permitted by Paragraph (3) of this Subsection, an amount not to exceed that portion of the system's net investment income attributable to the balance in the Employee Experience Account during the prior year.

(3)  In no event shall the amount in the Employee Experience Account exceed the reserve necessary to grant two cost-of-living adjustments as provided in Subsection C of this Section.

B.  The Employee Experience Account shall be debited as follows:

(1)  An amount equal to that portion of the system's net investment loss attributable to the balance in the Employee Experience Account during the prior year.

(2)  An amount sufficient to fund a cost-of-living adjustment granted pursuant to Subsection C of this Section.

(3)  In no event shall the amount in the Employee Experience Account fall below zero.

C.(1)  In accordance with the provisions of this Section, the board of trustees may recommend to the president of the Senate and the speaker of the House of Representatives that the system be permitted to grant a cost-of-living increase to retirees, survivors, and beneficiaries whenever the balance in the Employee Experience Account is sufficient to fund such benefit fully on an actuarial basis, as determined by the system's actuary.  If the legislative actuary disagrees with the determination of the system's actuary, a cost-of-living increase shall not be granted.  The board of trustees shall not grant a cost-of-living increase unless such cost-of-living increase has been approved by the legislature by concurrent resolution adopted by the favorable vote of a majority of the elected members of each house.  Any such cost-of-living increase shall be limited to and shall only be payable based on an amount not to exceed seventy thousand dollars of the retiree's annual benefit; however, effective for years after July 1, 1999, the seventy thousand dollar limit shall be increased each year in an amount equal to any increase in the consumer price index (U.S. city average for all urban consumers (CPI-U)) for the preceding year, if any.  Any increase granted pursuant to the provisions of this Subsection shall begin on the July first following legislative approval, shall be payable annually, and shall equal an amount not to exceed the lesser of:

(a)  Three percent.

(b)  An amount as determined in Paragraph (2) of this Subsection.

(2)  If the increase in the consumer price index, U.S. city average for all urban consumers (CPI-U), as prepared by the U.S. Department of Labor, Bureau of Labor Statistics, for the calendar year immediately preceding the cost-of-living increase is less than three percent, then the cost-of-living increase shall be a sum equal to the CPI-U increase for that prior calendar year, if any.

(3)  The percentage of each recipient's cost-of-living increase shall be based on the benefit being paid to the recipient on the effective date of the increase.

(4)(a)  Except as provided in Subparagraph (c) of this Paragraph, in order to be eligible for the cost-of-living increase, there must be the funds available in the respective experience account to pay for such an increase, and a retiree:

(i)  Shall have received a benefit for at least one year; and

(ii)  Shall have attained at least age fifty-five.

(b)  Except as provided in Subparagraph (c) of this Paragraph, a  nonretiree beneficiary will be eligible for the cost-of-living increase:

(i)  If benefits had been paid to the retiree or the beneficiary, or both combined, for at least one year; and

(ii)  In no event before the retiree would have attained age fifty-five.

(c)(i)  The provisions of Items (a)(ii) and (b)(ii) of this Paragraph shall not apply to any person who receives disability benefits from this system, or who receives benefits based on the death of a disability retiree of this system.

(ii)  The actuarial cost of implementing the provisions of Acts 2001, No. 1162, shall be paid by debiting the employee experience account which must have the funds available in the respective experience account to pay for such an increase.

(5)(a)  Effective September 1, 2001, any retiree receiving a retirement benefit shall be entitled to receive, as a cost-of-living increase, a minimum retirement benefit amounting to not less than thirty dollars per month for each year of creditable service of the retiree or the maximum benefit earned in accordance with the applicable benefit formula selected by the retiree at the time of retirement, whichever is greater.

(i)  For any retiree who selected or selects an early retirement, an initial benefit option, or a retirement option allowing the payment of benefits to a beneficiary, there will be a comparison of both the minimum benefit provided for in this Paragraph and the maximum benefit and both such benefits shall be actuarially reduced based upon the option selected by the retiree and the current board-approved actuarial assumptions prior to the comparison and for the purpose of determining which of the two benefit amounts results in the greater amount and the greater amount shall be paid to the retiree.

(ii)  In order for the minimum benefit provided for in this Paragraph to be compared to the annuity being paid to a retiree's named beneficiary, the minimum benefit shall be reduced based on the option in effect and the current board-approved actuarial assumptions.  After reducing the minimum benefit provided for in this Item, the reduced minimum benefit shall be compared to the beneficiary's annuity, and the beneficiary shall be paid the greater of the beneficiary's reduced minimum benefit or the amount of the beneficiary's annuity being paid at the time of the comparison.

(b)  The minimum benefits provided for in this Paragraph shall apply to all retired members and beneficiaries receiving annuity payments or benefits on September 1, 2001, and to all members retiring on and after September 1, 2001, and to all beneficiaries receiving annuity payments on and after September 1, 2001, and all such payments shall be funded by debiting the Employee Experience Account.

D.(1)  The authority to credit and debit the Employee Experience Account as set forth in Subsections A and B of this Section shall permanently terminate at the end of any fiscal year in which the accumulated balance of assets held in the Employee Experience Account equals or exceeds the total reserve required to fund the cost-of-living increase described in Subsection C of this Section permanently, as determined by the Louisiana Public Retirement Systems' Actuarial Committee, and the cost-of-living increase described in Subsection C of this Section shall be paid annually thereafter.

(2)  The asset reserve that is required to fund the cost-of-living increase described in Subsection C of this Section permanently shall be an amount equal to the present value of future normal costs, plus the increase in the accrued liability resulting from all prospective benefits covered in Subsection C of this Section for all current members, retirees, and nonretiree beneficiaries of the retirement system.

E.  The first normal cost-of-living increase shall be effective July 1, 1999.

Acts 1992, No. 572, §1; Acts 1999, No. 402, §1, eff. July 1, 1999; Acts 2001, No. 900, §1, eff. July 1, 2001; Acts 2001, No. 1016, §1, eff. June 30, 2001; Acts 2001, No. 1162, §1, eff. July 1, 2001; Acts 2004, No. 588, §1, eff. June 30, 2004.

NOTE:  See Acts 2001, No. 900, §2 relative to accountability for implementation of the Act and reports thereof.

NOTE:  See Acts 2004, No. 588, §2, relative to balances in the Employee Experience Account of the La. State Employees' Retirement System on June 30, 2004.