For the first time in at least five years, retired teachers, state workers and school system employees could see an increase in their pension checks.
BATON ROUGE, La. (AP) - For the first time in at least five years, retired teachers, state workers and school system employees could see an increase in their pension checks.
Louisiana's four statewide retirement system boards are preparing to seek legislative approval of a general cost-of-living adjustment for tens of thousands of retirees over age 60.
The Advocate reports (http://bit.ly/IB66CG ) the increases likely would be between 1.5 percent and 2 percent.
They would need the backing of two-thirds of lawmakers for approval in the upcoming regular session that begins in March.
The proposed increases come as all four statewide systems have registered better-than-expected investment earnings. That allowed some money to be put into savings accounts from which retiree raises are funded.
Under state law, the percentage increase is limited to either 3 percent or the increase in the Consumer Price Index's U.S. city average for all urban consumers, whichever is less. The retirement systems expect the price index to allow for no more than a 2 percent boost.
To be eligible for the adjustment, the same law also requires the retiree to have reached age 60 and to have received benefits for at least a year by July 1, 2014, when the increase would go into effect.
Kevin Kane, director of the Pelican Institute, a conservative New Orleans government policy research group, said the increase could add to the retirement systems' debt, the gap between what will be owed to all retirees and the money they have in hand.
Not accounting for how cost-of-living increases would be paid over time, along with other decisions that recur year after year, is part of the reason why the state's retirement systems have a debt of $19 billion, he said.
Maris LeBlanc, deputy director of the Louisiana State Employees Retirement System, said that shouldn't be an issue because the increase's cost will be covered by an account set up by the Legislature to receive the excess when investment returns come in higher than anticipated.
LeBlanc said the money is earmarked for paying cost-of-living adjustments after a portion is set aside to help pay down the debt.