LACERS BOARD UPDATE
By Michael R. Wilkinson, LACERS Commissioner
Email: MikeWilkinson4LACERS@gmail.com
L
ACERS gets a yearly report from our actuary to measure our progress in funding our retirement plan and health benefits. This is reflected in the funded ratio, or the assets of the retirement plan as a percentage of the liability of providing the benefits to active and retired members.
The capsule summary is that the funded ratio was improved from last year. The funding level for the retirement plan has decreased slightly, but this was more than offset by an increase in the funding for our health plan, which is more than 100 percent funded.
Why is the funded ratio important? This is one of the most important measures of how the retirement plan and health plan are funding all our benefits in the future. Also, this funding measure is used for another vital reason, to set the contribution level for payments by the City.
The funded level for retirement benefits decreased from 73.3 percent to 73.1. However, the health benefits increased its funded ratio from 97.0 percent to 107.1 percent. Because of the boost from the health-funded ratio to 107.1 percent, the combined funded ratio is now 77.1 percent (up from 76.4 percent last year).
LACERS’ high funded level for the health plan is due in part to the fact that the plan has been funding the health benefits on an actuarial basis for decades, while most other plans were operated on a “pay as you go” basis without any money invested for future years.
Finally, how does this information affect you as a Retiree? This data is used to set the City’s contribution rate, which assures that LACERS will continue to be financially strong. The City has paid the actuarially determined contribution rate in full every year.
It is critical for the City to make its required contribution. Other plans that are in financial troubles generally share the problem that their employer failed to make these required contributions. The failure to make these contributions meant that those plans had less money to invest and then fell further behind.
This coming year (fiscal year 2024-25), the contribution rate will go down slightly from 33.36 percent of payroll to 33.29 percent of payroll.
