Each year, LAGERS employers receive an annual actuarial valuation. This report not only contains an employer's next fiscal year's contribution rate(s), but also provides a wide range of information regarding an employer's financial standing in the system.
Valuations are calculated as of February 28th, so any changes with an employer that occur after that date won't be reflected until next year's valuation.
When an employer is considering a benefit change, they must request an additional supplemental actuarial valuation, that would amend the rates from the annual valuation if a benefit change or additional contribution were made by the employer.
Below is a brief explanation of a few of the most commonly asked about pages contained within the valuation. The full report can be accessed on ECLIPSE at any time.
Experiences of an employer can have a significant impact on what future monthly contribution rates will be. LAGERS actuaries take into account numerous assumptions and compare those assumptions to actual changes in an employer's personnel over the past year. For example, how many employees retired, turnover, salary increases, etc.
An employer's annual valuation explains what an employer's personnel looked like over the past year, and includes a history of employee retirements and the payout options elected by current retirees, as well as snapshots of the current employee pool which include average age, wages, and service information.
One of the most important pieces of information contained within a valuation is an employers' new rates for the coming fiscal year. Employer rates are adjusted annually to ensure that benefits are being funded at the appropriate levels. Each employer has a unique contribution rate depending on the level of benefits elected and the experiences of both the employer and the LAGERS system as a whole. Employers receive their new rates a minimum of six months in advance of the change.
Each LAGERS employer established an initial unfunded liability when they joined LAGERS. An unfunded liability is the difference between accrued liabilities and assets on hand. Over time, employers make contributions to LAGERS to fund promised benefits with the goal of reaching and maintaining 100% pre-funded status. Many variables can affect an employer's funding such as experiences of an employer, benefit changes, and the investment return of LAGERS' portfolio.
An employer may make lump sum payments toward their unfunded liability at any time, which will immediately reduce their monthly contribution rate and improve their funded status. Employers interested in making lump sum payments should contact the LAGERS office.