Friday, December 14, 2012

Louisiana State Retirement: Not What it Seems

A response to "LSU has to show Les Miles the money" by Times-Picayune reporter James Varney:

Mr. Varney: 

Thank you for the op-ed on Coach Miles and higher education. I would like to offer some facts for your consideration about benefits offered to Louisiana higher education employees.

Currently, Louisiana higher education employees in TRSL contribute 8 % of their salaries to the retirement system. This is almost twice the current 4.2 % Social Security (SS) contribution rate required of other American workers. Many state employees have paid into SS elsewhere. When they retire, if they’ve paid in less than 40 quarters of SS, they'll receive ZERO benefits. If they’ve paid in more than 40 quarters, the benefits will be actuarially reduced because they worked for a state that opted out of the SS program. If the faculty member’s spouse dies, they will lose 100 % of the spouse’s SS benefits immediately. Not only this, but TRSL has some of the worst vesting rules of any retirement system in the country. For example, if someone leaves before the retirement date, they get no match and no growth. Perhaps they could hold on for decades until they are eligible for a benefit and keep the money in the system, but inflation will destroy the return on investment.

A large number of higher education employees are in an Optional Retirement Plan (ORP)—Fidelity, TIAA-CREF. These people chose an independent retirement account, a defined contribution plan. They pay in 8 % and the state deposits 5.97 % into their accounts but no SS. The employees will be penalized by SS just like TRSL members. On July 1, 2013, TRSL is dropping the state ORP contribution to 5.18 %. At least The Times-Picayune sends 6.2 % to the feds on your behalf, and SS is a defined benefit plan. The ORP is not. Perhaps you have a 401(k) and even some kind of matching contribution. (In Mississippi higher education, the state contributes about 9 % directly to an employee’s ORP fund plus paying 6.2 % to SS.)

I want to challenge you to find one accredited university of any substance in the US with lower retirement contributions than the amount going to Louisiana state higher education employees in the ORP.

I will save you time. Such a university does not exist.

Also, the state health insurance is not free. I understand that the premiums are higher than those of an average employee of a decent Louisiana company, and almost every medical service requires a co-pay. There’s no paid vision, dental, etc.

Most state employees have not received a raise since 2008, and COLAs for retirees have been nonexistent for some time. Many current employees have been furloughed. Right now the state layoffs resemble the newspaper business.

For a slightly different perspective, I hope you will consider my piece titled “Les Miles and the Zombie Apocalypse.”

Thank you for reading the points above.


Dayne Sherman lives in Ponchatoula and is the author of Welcome to the Fallen Paradise: A Novel. His website at
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***This message speaks only for the writer, a citizen, not for any present or past employer.***