LAGERS March 2021 Board Report

LAGERS March 2021 Board Report

April 6, 2021 – The LAGERS Board of Trustees has a fiduciary duty to its membership to ensure the system is administered in a fiscally sound manner. The board meets at least quarterly to make sure LAGERS continues to deliver on its commitments of strength and security.

During LAGERS’ March 19, 2021 meeting, LAGERS staff provided updates of legislative, investment, and operations activities. The Board also unanimously approved LAGERS Fiscal Year 2022 Business Plan as well as the actuary’s recommendations following LAGERS’ most recent experience study. Below is a summary of the meeting. For more information on LAGERS Board of Trustees or official meeting minutes, please visit our Board of Trustees page.

LAGERS Fiscal Year 2022 Business Plan Approved

The LAGERS Board discussed and unanimously approved the business plan for the upcoming fiscal year. This plan helps ensure that LAGERS is actively and systematically planning for both the short and long term needs of the system. Every action item in the business plan aligns with one of four key strategies identified in LAGERS strategic plan. The four key strategies are:

  1. Safeguard assets in order to ensure the long-term sustainability of the pension fund while maintaining reasonable benefits
  2. Provide superior service while engaging stakeholders in order to promote a secure retirement for all.
  3. Ensure highly qualified and engaged team to provide the best possible outcome for our stakeholders
  4. Optimize utilization of technology and strive for innovation in all areas of the organization.

Legislative Report

The legislative team gave a report on the legislative activity of the first half of the 2021 regular legislative session. Specific discussion was held on three bills addressing the expansion of the Public Safety provision that was passed in 2019 for LAGERS’ members in 3rd class counties. The LAGERS Board reaffirmed their desire for all employers to have the Public Safety option. The bills are:

The team also briefed the board on several other bills of interest as well as expectations for the second half of the legislative session, which will end on Friday, May 14.

LAGERS Issues & Policy

Investment Update

LAGERS’ investment team reported on the investment activity from the last quarter, which included $176.70 million in commitments to the following asset classes:

  • $17.85 million to Equity
  • $103.0 million to Fixed Income
  • $5.85 million to Real Assets/Real Return
  • $50.0 million to Strategic

LAGERS’ portfolio has $9 billion in assets under management as of December 31, 2020.

Learn about LAGERS Investments

Experience Study Report

At least once every five years, LAGERS, in conjunction with LAGERS’ actuaries and consultants, perform an experience study. This study examines all of the economic and demographic assumptions used in the valuation of employer contribution rates. LAGERS believes that assumptions should be carefully chosen and continually monitored to ensure that LAGERS is able to pre-fund member benefits. This periodic experience study is key to maintaining appropriate assumptions over time.

Judy Kermans and Mita Drazilov, LAGERS’ actuaries from Gabriel, Roeder, Smith & Co, presented the recent experience study, noting LAGERS has a strong funding policy and a history of success. Following their presentation, the Board voted unanimously to adopt the recommended assumptions of the report including an update to the mortality tables that project improvements in mortality over time, a slight lowering of the investment return assumption from 7.25% to 7.00% to align with future capital market expectations, and a slight decrease in the wage inflation and cost of living adjustment assumptions to reflect historical experience.

While the adopted changes do not impact member or retiree benefits, the board believes these small, proactive adjustments to LAGERS’ assumptions will help ensure LAGERS continues to calculate appropriate contribution rates for each employer so that member benefits continue to be fully funded over time. The system’s funding as a whole remains strong at 93.7% funded, and the board is proud to continue to deliver on a track record of strength and security!