LACERS BOARD UPDATE
By Michael R. Wilkinson, LACERS Commissioner
Email: MikeWilkinson4LACERS@gmail.com
L
ACERS’ actuary, Segal, reports an increase in the funded level of the retirement and health plans for the period ending June 30, 2024.
The funded level compares the actuarial value of the LACERS investments with the actuarial obligation to provide benefits to all Retirees, active members and beneficiaries.
The funded level for retirement benefits increased from 73.1 percent to 73.4 percent while the health benefit funded level increased from 107.1 percent to 108.0 percent. The health benefit funding level is so high because LACERS recognized the importance of financial strength and “prefunded” this plan decades ago. As a result, LACERS is far ahead of most other public retirement plans that were funding their health plans on a “pay-as-you-go” method and not putting funds aside for the future. At a time when we are all concerned about health costs, this is an enviable position.
The total funding level of the retirement and health plans increased from 77.1 percent to 77.5 percent. The actuarial value of the plan increased from $23.4 billion to $22.2 billion, a 5.2 percent change for the year. The June 30, 2024, one year investment return on a market value basis was 8.23 percent, while it was 6.71 percent on an actuarial (smoothed) basis. This return places LACERS ahead of the 7.0 percent goal of the assumed rate of return on a market value basis while it lags slightly on an actuarial basis.
LACERS’ financial support comes from three sources: employee contributions, employer (City) contributions and investment earnings. Each year the actuary determines how much the City must pay to keep the plan financially strong. The City contributes its portion based on a percentage of the payroll for active employees. The recommended rate for the upcoming year (beginning July 2025) is 31.44 percent, a decrease of 1.85 percent from this year’s rate of 33.29 percent
