Legislation aimed at helping Louisiana colleges with faculty recruitment and retention is nearing final legislative passage.
The Louisiana Senate on Thursday voted 35-0 for House-passed legislation that would improve — over time — retirement benefits for certain higher education employees.
House Bill 6 affects higher education employees, who choose to participate in the Optional Retirement Plan.
Under current law, employees are contributing 8 percent, but their employers are paying substantially less because of the formula used. Beginning July 1, the employer contribution would be 3.66 percent.
State Rep. Kevin Pearson’s HB6 would at least guarantee an employer contribution equal to Social Security’s 6.2 percent by July 1, 2018.
In the interim, college and university management boards could adopt employer contributions higher than the required 3.66 percent.
Louisiana higher education’s employer match is the lowest in the country. The next-lowest rate in the country is 6.4 percent. Colleges are having trouble recruiting faculty and staff because of the low employer contributions.
The Optional Retirement Plan is an alternative to the traditional defined benefit plan. It is provided through a private carrier.
Employee and employer contributions are invested in options chosen by the individual member. The performance of the member’s investments determines the retirement benefit due.
The optional plan is popular among those in the academic arena because it is portable.
HB6 returns to the House for concurrence in a Senate change which stipulates that no additional funding would be appropriated for the higher employer contribution rate. The next step is the governor’s desk.