EMPLOYER CONTRIBUTIONS. . .

 

While the 4% member contribution is set by state statute, the employer percentage is not. The law requires that the employer (political subdivision) contribute actuarially-computed amounts which, together with employee contributions and LAGERS investment income, will cover the costs for the political subdivision's participation in LAGERS.

Each political subdivision receives its own cost calculation and employer contribution rate(s) before it joins LAGERS by supplying data concerning its employees.

Some of the important factors for determining an employer's contribution rate are:

(a) The job classifications of the covered employees. For example, general, police officers, and/or fire fighters.

(b) The level of benefits granted by the employer.

(c) The amounts of prior employment (employment rendered before the political subdivision joins LAGERS) which became credited as prior service. The more prior service employees have, the higher the cost. While it is desirable to give full service credit for prior (full time) employment, a subdivision can gain financing flexibility by electing to cover 75%, 50% or 25% of prior employment rather than 100%. However, once elected, the amount of prior service granted cannot be changed. The cost for prior service also may either be paid 'lump-sum' or amortized over a thirty-year period.


(d) Whether or not employee contributions are required.


(e) Investment return of the LAGERS system.

After joining LAGERS, the employer's contribution rate is adjusted automatically every year in order to reflect the changes in the composition of the employees and assumptions of the system. This is accomplished by annual actuarial valuations at the expense of LAGERS.

The employer contribution rates will vary from employer to employer based on the aforementioned data.  Additional information concerning employer contribution rates may be obtained from the LAGERS office.