Human Resources

Louisiana State Employer’s Retirement System (LASERS)

http://www.lasers.state.la.us/

Frequently Asked Questions:

Who administers this plan?

A 12-member Board of Trustees oversees LASERS’ operations.  The law designates members of the board as follows: six elected trustees, who are active members of the system; three elected trustees, who are retired members of the system; the chairman of the House Retirement Committee, ex officio; the chairman of the Senate Finance Committee, ex officio; and the State Treasurer, ex officio.

Who is eligible for membership?

Membership is mandatory for all classified state employees appointed for greater than 50 percent of full-time effort for greater than two years, except those excluded by law.  Membership is optional for employees who are 60 years of age or more at the time of employment, and employees who are 55 years of age or more at the time of employment and who have credit for a least 40 quarters in the Social Security system.

What is my contribution?

Currently, the law sets the employee contribution rate at 7.5 percent of earned compensation (base pay) for most state employees.  GSU pays an employer contribution that is determined each year based on an actuarial formula, also set by state law.  Since January 1, 1984, your employee contributions have been tax-sheltered.  This means the money you contribute to LASERS is not subject to federal or state income taxes until LASERS pays the money to you either as a refund or as a retirement benefit.

Can my Contributions be refunded?

LASERS will pay you, your survivors, your beneficiary, and/or your estate an amount equal to your total employee contributions.  You may apply for a refund of your employee contributions, without interest or investment earnings, when you leave state service, even if you are eligible to retire.

How long must I be employed to be vested?

You must have 10 years of creditable service to be vested in the system.

If I participate in this plan, do I contribute to Social Security?

No. If you were employed after April 1, 1986, you will pay the Medicare portion of the FICA tax, which is currently 1.45 percent of gross pay.

When may I retire?

To be eligible for retirement, you must have:

  • 30 years of service, or more, regardless of age
  • 25 years of service, or more, at age 55 or later
  • 10 years of service, or more, at age 60 or later

You may retire with 20 years of service credit at any age; however, your retirement benefit will be reduced on an actuarial basis, based on your age and length of service.

Must I apply for retirement?

Yes.  Termination of state service does not automatically constitute application for retirement.  You must apply for retirement in writing, using LASERS retirement application form, available from the Department of Human Resources.  You must select a retirement option at the time of application.  The option you select cannot be changed after the effective date of retirement, except in some limited circumstances.  The options are explained in the Membership Handbook.

What determines the amount of my benefit?

LASERS uses a benefits formula that is designed to provide you with a maximum retirement benefit equal to 2.5 percent of your final average compensation for every year of creditable service.  Benefits may not exceed I 00 percent of your final average compensation.  If you elect to leave a benefit for a surviving spouse/beneficiary, your benefit will be actuarially reduced to allow you survivor to receive a lifetime benefit.

Sample Calculation
{Years of Service} x {3-Year Average Salary}=Benefit
{25 years of service} x {0.025} x {30,000 average salary}=18,750 benefit
{30 years of service} x {0.025} x {30,000 average salary}=$22,500 benefit

Will retirement benefits increase after I retire?

Although not guaranteed, periodic cost-of-living adjustments may be made to your retirement benefits.

What if I become disabled?

You may be entitled to disability benefits if you become disabled during active state service and have
accumulated at least 10 years of service credit . You may apply for disability benefits after leaving state
service if you have not reached regular retirement age eligibility, have 20 years or more of service and
can present convincing evidence that the disability occurred during active state service.

What if I die before I retire?

Survivor benefits are payable under certain conditions to your spouse, minor children, and totally disabled or mentally handicapped children upon your death.  If death occurs while you are in active service, you must have at least five years of service credit.  If death occurs after you have terminated employment, you must have at least 20 years of service credit.  For detailed information on survivor benefits, see the LASERS Membership Handbook.

If I terminate employment before retirement, what benefits are available?

You may apply for a refund of your employee contributions, without interest or investment earnings, when you leave state service.  When you accept a refund of your contributions, you automatically forfeit all service credit and accrued rights in LASERS.  The system does not pay interest on any amount refunded.  LASERS process most refunds with 45 days of your date of termination, if refund application is received timely.

What is DROP?

The Deferred Retirement Option Plan (DROP) is an optional method of retiring for LASERS in which you choose to freeze your regular monthly retirement benefits and have this benefit deposited each month in a special account at LASERS while continuing to work and draw a salary for a LASERS’ employer.

What is the DROP account?

The retirement benefit is paid into a savings account called the DROP Account.  The account does not earn interest while you are participating in DROP’ however, if you continue to be employed following DROP participation, the account will begin to accumulate interest on your behalf.

Will I continue to contribute to LASERS while in DROP?

No, the retirement contributions that are normally deducted from your salary are discontinued while you are participating in DROP.  It may be possible to put this money into an alternative tax-sheltered supplemental retirement account while you are in DROP.  See the Tax-Deferred supplemental Retirement Account for details on tax sheltering a portion of your salary.

When may I enter the DROP program?

You may enter the DROP program when you are first eligible to retire from LASERS within 10 years of service and at least age 60, 25 years of service and at least age 55; or 30 years of service, regardless of age.  You must enter Drop with a “window” of time.  The “window” begins on the earliest date of eligibility for regular retirement and continues for three years and 60 days from the date.  In effect, the “window” sets an ending date for DROP participation.  Participation in DROP must end no later than three years and 60 days after the first retirement eligibility date.

If you wait to enter DROP at some point after eligibility, the length of time you can stay in DROP is reduced.  For example, if you enter DROP one year after first becoming eligible, you can stay in DROP for two years and

60 days.  You cannot end DROP prior to the stated ending date unless you terminate employment or in the event of your death.  The participation period cannot be extended.

Will I be treated differently while participating in DROP?

While you are in the DROP program, you continue in state employment and have all the rights and responsibilities of other employees except for those relating to retirement.  The conditions of your employment do not change because an individual elects to participate in DROP.  You will be eligible for promotions and salary adjustments and may transfer to another state agency.  You continue to earn leave as established for the position and may use accumulated leave according to the policies of your employer.  When you elect to retire following DROP, you will receive an additional retirement benefit based or) the balance of your accumulated leave.

When does DROP participation end?

DROP participation ends if you leave state employment before the end of the DROP period.  At that time, you would begin receiving a monthly retirement benefit and can withdraw funds form the DROP account.  You may elect to continue working after DROP participation ends.  Both employer and employee again pay contributions into LASERS, based on the current earnings.  Monthly credits to the DROP account stop at the end of the DROP period and the account begins to earn interest.  You cannot withdraw the DROP money until state employment ends. 

Will my sick and annual leave balances add to my DROP benefit?

Sick and annual leave are not used when computing the benefit for DROP participation.  When you elect to retire and your employment ends, you will begin receiving a monthly retirement benefit and will include adjustments for additional service credit based on the conversion of eligible unused sick and annual leave.  For complete details concerning LASERS’ DROP program, see LASERS’ Membership Handbook.

What is the LASERS Initial Benefits Option?

The Initial Benefit Option is a lump-sum benefit that is available if you do not participate in the DROP program.  At the time of retirement, you may elect to receive up to 36 times your monthly retirement benefit in a lump sum and monthly retirement benefit, as well as that of your beneficiary, will then be reduced on an actuarial basis.

How is the lump-sum benefit paid?

You can receive the “initial benefit” in a lump-sum payment, or it can be deposited in an account just like the DROP account.  The interest earnings and withdrawals will be the same as for the DROP account.  The main difference is that it will be created at the time of retirement with a lump-sum deposit instead of accumulated over a DROP participation period.  If you are under age 55 at the time of retirement, the lump-sum payment will be subject to the 10 percent federal penalty for early withdrawal.

The initial benefit is not available if you retire due to a disability, but early retirees (such as 20-year retirees) can elect to participate.  Additional information on the Initial Benefit Option is included in the LASERS Membership Handbook.