Supreme Court: La retirement plan unconstitutional
BATON ROUGE, La. (AP) — The Louisiana Supreme Court ruled Friday that Gov. Bobby Jindal's plan to shift future rank-and-file state workers to a 401(k)-style retirement plan is unconstitutional.
Justice Greg Guidry, writing for the majority, said the court upheld the decision by state District Judge William Morvant in Baton Rouge who said the law was unconstitutional because it didn't receive enough support from lawmakers.
"Accordingly, we affirm the district court's judgment," Guidry wrote in a one-page ruling.
Morvant sided with the Retired State Employees Association of Louisiana, which argued the change required a supermajority vote because the legislative actuary who analyzes retirement bills deemed it carried a price tag. Neither the House nor Senate gave the bill a two-thirds vote on initial passage.
Lawmakers had delayed for a year the program's start which had been slated to begin in July.
The bill, approved in the 2012 legislative session, created an investment account similar to a 401(k) plan for state employees hired after July 1, 2013. That would stand in place of a monthly retirement payment based on salary and years of employment.
Under the changed system, the contributions made by the employee and the state would be invested, and the account would grow at the rate of investment earnings. The employee would never lose money for investment slumps, as in a traditional 401(k) plan.
Louisiana was set to become the first state in the nation to provide only the "cash balance" retirement plan for certain employees, without also offering federal Social Security benefits.
Supporters of the cash balance plan described the change as a way to rein in the costs of retirement programs that are billions of dollars short of the money they'll need to pay for all benefits promised. Opponents said the new investment account wouldn't give state workers enough of a safety net.
The ruling by the Supreme Court now places the idea indefinitely on hold.
Jindal in a statement late Friday said the administration would work with legislators "on the best way to proceed."
"We think the cash balance plan is good for the people of Louisiana because it helps get our retirement liabilities under control, protects taxpayers and provides new state employees with a portable retirement account that realizes investment earnings," Jindal said.