TRSL responds to new study about teacher pensions

January 27, 2015

A “study” by the National Council on Teacher Quality (NCTQ) actually does a disservice to the very teachers it claims will benefit from changes to retirement options currently available.

TRSL provided NCTQ with a response to the report on Louisiana’s retirement system for teachers. Here is a condensed version of our response.

TRSL is flexible and portable. It is TRSL’s position that the traditional defined benefit (DB) plan should remain as the retirement plan option available to Louisiana’s K-12 teachers. The DB plan offers a comprehensive retirement program that provides for normal retirement, disability retirement, survivor benefits, potential for retiree permanent benefit increases, and portability through service credit purchase options and reciprocity.

• Members can purchase service credit that provides mobility among public and private teaching positions and other public sector employment.
• TRSL recognizes reciprocal service credit from any other Louisiana state, municipal, or parochial retirement system, and each of those systems recognizes TRSL service credit.
• TRSL members can also purchase service credit canceled as a result of withdrawal of contributions, teaching service while on leave of absence without pay, teaching service in any nonpublic college or university or school in Louisiana, teaching service in any United States dependent school, substitute teaching service, and military service.

Louisiana has taken important steps to contain retirement costs and ensure sustainability. Since the late 1980s, Louisiana has taken steps to address the unfunded accrued liability (UAL) and increase the system’s funded status. The UAL exists because prior to 1987, the state was not making payments required to fully fund the retirement system. Since that time, necessary payments have been made. Additional measures have also been taken to contain costs, including:

• Implementing anti-spiking provisions to prevent enhancement of benefits at end of career
• Requiring retirement provisions that have a cost to identify a funding source that will cover the cost within 10 years
• Re-amortizing the UAL to provide for more level debt payments
• Applying excess TRSL investment earnings and a percentage of non-recurring general fund revenue to retirement system debt
• Creating a new tier of retirement benefits that increases the retirement eligibility age and the final average compensation (FAC) period for new hires
• Requiring 2/3 legislative approval for retirement provisions with a cost

Studies show that traditional defined benefit plans have a proven track record of attracting and retaining teachers and are more efficient in providing a target level of retirement income than defined contribution plans. A guaranteed lifetime income provides retirees with financial security, which has become increasingly important as financial markets have struggled for stability in recent years. TRSL believes Louisiana’s teachers, who cannot participate in Social Security, should not have to rely solely on defined contribution plans to provide their retirement.

More information about NCTQ can be found here.