Dear LRTA Email Club members,
I am pleased to share this long-awaited news. There is now enough money in the Experience Account to distribute a 2 percent cost-of-living adjustment (COLA) to retirees who are at least 60 years of age (by July 1, 2022) and been retired at least one year! The Teachers’ Retirement System of Louisiana (TRSL) earned record-breaking returns on its investments this past fiscal year, realizing nearly 36 percent returns on investments. The funded status of the system rose from 67.9 percent to 71.8 percent and the unfunded accrued liability (UAL), or debt, has dropped to $9.3 billion. All of this is positive news as it relates to the financial status of the system. After paying its obligations and administrative costs, TRSL was able to add enough funds in the Experience Account to provide for a COLA for eligible retirees!
Permanent Benefit Increases (PBIs), commonly referred to as COLAs, are not pre-funded and are currently funded exclusively from excess investment earnings. The Experience Account is credited only after the first $249.6 million in excess earnings is used to pay down the UAL. After that, 50 percent of excess earnings above the $249.6 million hurdle, if any, would be credited to the Experience Account. The law also dictates who can receive the COLA and how much the COLA will be. For example, since the funded status of the system is over 65 percent, the law provides that the system can distribute a 2 percent COLA when funding is available. For the next COLA, a 2 percent increase would apply to the first estimated $68,000 of the qualified retiree’s benefit.
On Thursday, November 4, TRSL Actuary Shelley Johnson confirmed the requirements have been met and TRSL Director Katherine Whitney brought forth a proposal for a 2 percent cost-of-living adjustment for eligible retirees to the Board of Trustees. The Board unanimously approved this resolution, and the resolution will be sent to the legislature as notification that there is enough funding for a COLA.
This is great news for Louisiana’s retired teachers! We have officially taken the next step toward a COLA that will impact a larger group of retirees.
The Public Retirement System Actuarial Committee (PRSAC) will meet to approve the valuation report of the system. This committee generally meets in December or January. Once the valuation of the system is approved, TRSL will begin to approach legislators to author a bill for the COLA for the next regular legislative session.
Remember: the Louisiana legislature must approve the COLA before it is granted. We will communicate to legislators that the funding for the COLA comes from excess earnings, not the state general fund.
A COLA could be coming soon for retirees! What can you do to help get the COLA approved by the legislature in 2022?
Make sure to stay connected with LRTA. Like our Facebook page and check out our website, www.lrta.net
. We will provide you with updates as they become available. You will also receive “Action Alerts” when it is time to contact legislators. LRTA will provide you the tools and advocacy resources to help you contact legislators so they will approve the COLA.
Finally, please encourage fellow retirees to join LRTA if they are not already a member. There’s strength in our numbers! We need all retirees to become advocates through LRTA to assure a COLA is approved by the legislature in 2022.
Rodney R. Watson
LRTA Executive Director