Funding for your LAGERS benefits come from three sources: your contributions, your employer's contributions, and investment return of the system.
A few things to know about your employee contributions:
If your employer elects to be non-contributory, they agree to pay the full amount of the required cost of LAGERS benefits and the employees do not contribute.
All contributions made solely by an employer are deposited to the credit of the employer's assets and cannot be distributed to you if you're not vested upon termination prior to retirement.
Employer contribution rates are actuarially determined, and state law requires that every LAGERS employer contribute their full actuarially required contribution to ensure your benefits are properly funded.
Some of the important factors for determining an employer's contribution rate are:
Employers’ contribution rates are adjusted annually in order to reflect the changes in the composition of each employer’s employee pool and assumptions of the system. This is accomplished by annual actuarial valuations.
LAGERS pools all employee and employer contributions and professionally manages the assets allowing members to focus on their jobs. LAGERS is typically able to achieve a higher rate of return than an individual investment account because of LAGERS' economies of scale, perpetual investment time horizon, and dedicated investment staff.
While investment returns do not directly impact individual member benefits, they can impact an employer's contribution rate.