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Rs 11:542 Experience Account

§542. Experience account

A.(1) Effective July 1, 2004, the balance in the experience account shall be zero.

(2) Effective June 30, 2009, the balance in the experience account shall be zero. Any

funds in the experience account on June 29, 2009, shall be allocated in the following order:

(a) To provide for any net investment loss attributable to the balance in the account

as provided in Subparagraph (B)(3)(a) of this Section.

(b) To fund any permanent benefit increase or minimum benefit pursuant to Act 144

of the 2009 Regular Session of the Legislature.

(c) To apply to the experience account amortization base as provided in R.S.

11:102.1(C)(2); however, as of June 30, 2009, these funds shall be transferred to the system's

Texaco Account and retained in a subaccount of that account until that account is applied as

provided in R.S. 11:102.1. The subaccount shall continue to be credited and debited as

provided in this Section until such application.

B.(1) Effective for the June 30, 2015 valuation, the system's funded percentage for

purposes of this Section shall be determined before any allocation to the experience account.

(2) The experience account shall be credited as follows:

(a) To the extent permitted by Subparagraph (c) of this Paragraph and after allocation

to the amortization bases as provided in R.S. 11:102.1, an amount not to exceed fifty percent

of the remaining balance of the prior year's net investment experience gain as determined by

the system's actuary.

(b) To the extent permitted by Subparagraph (c) of this Paragraph, an amount not

to exceed that portion of the system's net investment income attributable to the balance in the

experience account during the prior year.

(c) In no event shall a credit be made to the account that would cause the balance in

the experience account to exceed the reserve necessary to grant:

(i) Two permanent benefit increases determined pursuant to Subsection D of this

Section if the system is at least eighty percent funded.

(ii) One permanent benefit increase as determined pursuant to Subsection D of this

Section if the system is less than eighty percent funded.

(d) If the system is less than eighty percent funded and the account has reserves in

excess of the amounts provided for in Item (c)(ii) of this Paragraph, no amount shall be

credited to the account.

(3) The experience account shall be debited as follows:

(a) An amount equal to that portion of the system's net investment loss attributable

to the balance in the experience account during the prior year.

(b) An amount sufficient to fund a permanent benefit increase granted pursuant to

the provisions of this Section.

(c) In no event shall the amount in the experience account fall below zero.

C. 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 permanent benefit increase to retirees, survivors, and

beneficiaries whenever the conditions in this Section are satisfied. The board of trustees

shall not grant a permanent benefit increase unless such permanent benefit increase has been

approved by the legislature.

D.(1) No increase shall be granted if one or more of the following apply:

(a) The system is less than fifty-five percent funded.

(b) The system is at least fifty-five percent funded but less than eighty-five percent

funded and the legislature granted a benefit increase in the preceding fiscal year.

(c) The system is less than eighty percent funded and the system fails to earn an

actuarial rate of return which exceeds the board-approved actuarial valuation rate.

(2) Any increase granted pursuant to the provisions of this Section shall begin on the

July first following legislative approval, shall be payable annually, and shall equal the

amount required pursuant to Subparagraph (a) or (b) of this Paragraph. If the balance in the

experience account is not sufficient to fully fund that sum on an actuarial basis as determined

by the system actuary in agreement with the legislative auditor's actuary, no increase shall

be granted. The increase shall be an amount equal to the lesser of:

(a) 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 twelve-month period ending on the system's valuation date, if any.

(b)(i) Three percent, if the system is at least eighty percent funded and the system

earns an actuarial rate of return of at least eight and one-quarter percent interest on the

investment of the system's assets.

(ii) Two and one-half percent if all of the following apply:

(aa) The system is at least seventy-five percent funded but less than eighty percent

funded.

(bb) The system earns an actuarial rate of return of at least eight and one-quarter

percent interest on the investment of the system's assets.

(cc) The legislature has not granted a benefit increase in the preceding fiscal year.

(iii) Two percent, if either of the following applies:

(aa) The system is at least sixty-five percent funded but less than seventy-five percent

funded and the legislature has not granted a benefit increase in the preceding fiscal year.

(bb) The system is at least seventy-five percent funded and the system does not earn

an actuarial rate of return of at least eight and one-quarter percent interest on the investment

of the system's assets.

(iv) One and one-half percent if the system is at least fifty-five percent funded but

less than sixty-five percent funded and the legislature has not granted a benefit increase in

the preceding fiscal year.

(3) The percentage of each recipient's permanent benefit increase shall be based on

the benefit being paid to the recipient on the effective date of the increase; however, any

such permanent benefit increase granted on or before June 30, 2015, shall be limited to and

shall be payable based only on an amount not to exceed seventy thousand dollars of the

retiree's annual benefit. Additionally, any such permanent benefit increase granted on or

after July 1, 2015, shall be limited to and shall be payable based only on an amount not to

exceed sixty thousand dollars of the retiree's annual benefit. Effective for years after July 1,

1999, and on or before June 30, 2015, the seventy-thousand-dollar limit shall be increased

each year in an amount equal to any increase in the CPI-U for the preceding year. Effective

on or after July 1, 2015, the sixty-thousand-dollar limit shall be increased each year in an

amount equal to any increase in the CPI-U for the twelve-month period ending on the

system's valuation date.

(4)(a) Notwithstanding any provision of this Section to the contrary, in a year in

which the experience account balance is insufficient to fund the amount required pursuant

to Paragraph (2) of this Subsection, the board may make the recommendation provided in

Subsection C of this Section if all of the following conditions are satisfied:

(i) No benefit increase was granted in the preceding fiscal year.

(ii) The experience account balance established in the system valuation for the

preceding fiscal year reached its maximum reserve permitted pursuant to Subparagraph

(B)(2)(c) of this Section applicable to the system valuation for that valuation year.

(iii) The experience account balance established in the system valuation for the

current fiscal year is insufficient to fund the increase permitted pursuant to Paragraph (2) of

this Subsection applicable to the system valuation for the preceding fiscal year.

(iv) All of the insufficiency in the account is attributable to the following:

(aa) The growth of the cost of the increase, but only if that growth was produced

solely by either or both of these events:

(I) Changes in the pool of the eligible recipients.

(II) The growth in the benefit amount to which the increase applies due to the

application of the CPI-U pursuant to the provisions of Paragraph (3) of this Subsection.

(bb) The insufficiency of credits to the account, if any, to cover the growth in the cost

of the increase.

(b) The amount of the increase shall be equal to the amount that the balance in the

experience account will fully fund rounded to the nearest lower one-tenth of one percent.

E.(1)(a) Except as provided in Subparagraph (c) of this Paragraph, in order to be

eligible for any permanent benefit increase payable on or before June 30, 2009, there must

be the funds available in the experience account to pay for such an increase, and a retiree:

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

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

(b) Except as provided in Subparagraph (c) of this Paragraph, a nonretiree

beneficiary shall be eligible for the permanent benefit increase payable on or before June 30,

2009:

(i) If benefits had been paid to the retiree or the beneficiary, or both combined, for

at least one year.

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

(c) 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.

(2)(a) Except as provided in Subparagraph (c) of this Paragraph, in order to be

eligible for any permanent benefit increase payable on or after July 1, 2009, there shall be the

funds available in the experience account to pay for such an increase, and a retiree:

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

(ii) Shall have attained at least age sixty.

(b) Except as provided in Subparagraph (c) of this Paragraph, a nonretiree

beneficiary shall be eligible for the permanent benefit increase payable on or after July 1,

2009:

(i) If benefits had been paid to the retiree or the beneficiary, or both combined, for

at least one year.

(ii) In no event before the retiree would have attained age sixty.

(c) 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.

F.(1) The first normal permanent benefit increase shall be effective July 1, 1999.

(2) The actuarial cost of implementing the provisions of Act No. 1162 of the 2001

Regular Session of the Legislature shall be paid by debiting the experience account which

shall have the funds available in the experience account to pay for such an increase.

(3) Effective September 1, 2001, any retiree receiving a retirement benefit shall be

entitled to receive, as a permanent benefit 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.

(a) 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 shall

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.

(b) 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 Subparagraph, 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.

(c) 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 experience account.

G. Repealed by Acts 2016, No. 95, §2, eff. June 30, 2016.

Acts 1992, No. 572, §1; Acts 1999, No. 402, §1; 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. July 6, 2004; Acts 2009, No. 497, §§1 & 3, eff. June 30,

2009; Acts 2012, No. 483, §1, declared unconstitutional by La. Supreme Court; HCR 2 of

the 2013 R.S., eff. May 23, 2013; Acts 2014, No. 399, §1, eff. June 30, 2014; Acts 2016, No.

95, §§1, 2, eff. June 30, 2016.

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.

NOTE: See Acts 2009, No. 497, §2, eff. June 30, 2009, relative to conflicts

with previous Acts and §4 relative to affect on contribution rates.

NOTE: See Acts 2014, No. 102, eff. 6/30/14 granted a PBI in accordance

with the provisions of this Section.

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Local Government
Louisiana
5
2
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John Bel Edwards
John Bel Edwards
January 11, 2016 -
Democratic
1-225-342-4404
900 North 3rd Street, Baton Rouge, LA, 70802

Keywords
benefit
fund
increase
account
experience
grant
retiree
pay
permanent
balance