LACERS Financial Report: Strength for Longer Lives


Michael Wilkinson, LACERS/Legal Representative

By Michael R. Wilkinson
LACERS/Legal Representative

Once a year, LACERS produces its comprehensive annual financial report for the fiscal year ending June 30 to cover the financial health of the plan. Okay, spoiler alert: LACERS did great (again) and was awarded the Public Pension Standards Award for Funding and Administration for the sixth consecutive year.

Now I know that this doesn’t sound like an exciting subject for a story, but there are gems in this 124-page tome that should make you comfortable that your pension plan is strong and in good hands.

All of the figures in this report are for the last fiscal year, so it does not include the ups and downs of the financial markets in the last half of the year, or the first part of the 2019.

Investment returns were strong during the fiscal year and returned 9.0 percent after paying investment fees. This performance exceeded our assumed rate of return of 7.25 percent, bringing the value of the total portfolio to $17 billion, 8.3 percent higher than the previous year.

The funded ratio is the relationship between the actuarial value of the plan assets divided by the actuarial value of the liabilities (the expenses of paying benefits and administrative costs).

Although the plan had a very strong year in investment returns, the funded ratio went down from 71.4 percent to 70.1 percent due in large measure to a change in mortality tables. This means that the plan is recognizing that retirees are living longer and the plan must budget for those longer pensions. Our health program is one of the best funded in the country and decreased from 81.1 percent to 70.1 percent. The reduction was again due to the change in mortality tables, but offset by a decrease – yes, decrease – in the renewal premiums from our healthcare providers.

It is important to remember that City is legally obligated to pay 100 percent of the required contribution to keep the plan in a strong financial position as determined by the plan’s actuary and the board. The City paid that this year ($551 million) and has paid it every year.