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.
The board gathered on March 25, 2022 for their quarterly meeting. 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.
Presentation of LAGERS Actuarial Risk Analysis
LAGERS actuaries, Mita Drazilov and Michael Gano presented the results from LAGERS recent Actuarial Risk Analysis. As fiduciaries, one of the primary focuses of the LAGERS Board is to ensure the system is well-positioned for the future.This analysis is intended to aid the board in understanding the effects on the system should future experience differ from the system’s actuarial assumptions and provide insight on any future considerations for the system. Some of the highlights of their commentary include:
- LAGERS is one of the best plans nationwide when looking at historic employer rate stability.
- LAGERS is in a terrific position to withstand periods of high inflation.
- LAGERS Benefit Reserve Fund (the fund retirement benefits are paid from) is positioned to remain well-funded even if the system experienced a decade of high inflation, and lower than expected investment returns.
In closing, LAGERS actuaries applauded the Board for the proactive analysis and emphasized the results should give them great confidence that even under extreme conditions, the LAGERS system is among one of the strongest plans nationwide. No recommendations were necessary following the report.
The legislative team gave an update on the progress of the 2022 legislative session. Of note, they updated the board on the progress of LAGERS Public Safety Bills, HB 1473, sponsored by Representative Pike, and SB 655, sponsored by Senator Crawford. Both bills have been Third Read and Passed by their chamber of origin, and now await committee referrals cross-chamber. The team noted while this is outstanding progress, they are cautious about the second half of session as legislative progress continues to be stifled by party infighting and cross-chamber discord.
The team also shared an update on the recent and successful LAGERS Legislative Day which was held on March 23rd.
For more information on LAGERS’ legislative efforts, visit our Issues and Advocacy Page.
LAGERS’ investment team discussed the investment activity from the last quarter, which included $589.5 million in commitments to the following asset classes:
- $84.2 million to Equity
- $263.9 million to Fixed Income
- $121.4 million to Real Assets/Real Return
- $120.0 million to Strategic
LAGERS’ portfolio has $10.5 billion in assets under management as of December 2021.
LAGERS’ Chief Investment Officer, Brian Collett, also provided some additional commentary to the Board regarding the system’s exposure to Russian assets, noting that in response to the unprecedented conflict and humanitarian crisis created by Russia’s invasion of Ukraine, LAGERS has directed all managers to prohibit any future investment in Russia. The team further commented that as each manager continues to evaluate and divest in line with their established investment processes, LAGERS’ holdings have decreased from $13.4 million on February 22, 2022 to $2.16 million, or 0.02% of the total LAGERS’ portfolio, on March 15th.
The team in conclusion noted the un-audited return for LAGERS’ upcoming valuation cycle is estimated to be approximately 14%, and would likely exceed LAGERS’ assumed rate of 7.0%. This will likely help lend further contribution rate stability for employers and continue to move the system toward 100% prefunded. A final, audited return will be shared at the June Board meeting.
Learn about LAGERS Investments
The operations team reported the system has taken on the administration of two new legacy plans in 2022. A legacy plan is a separate pension plan that was locally run by an employer prior to the employer joining the system and covering employees under LAGERS. These are plans that have since been closed to participants, but still have retirees receiving benefits. LAGERS legacy administration option enables employers to take advantage of LAGERS’ scale and expertise in pension administration so that they can focus better serving their communities. The two legacy plans LAGERS began administering in 2022 are:
- City of Rock Hill Police & Fire
- City of Maplewood Police & Fire
The team also noted an increase in the number of employers exploring benefit enhancements within the system. Staff believes this is due largely in part to recruiting and retention issues many local government employers are facing, and highlights the importance of having effective tools, like LAGERS, in helping employers attract and retain great public workers into service.
The team also reported that Member Annual Statements had been mailed on schedule, and also provided an update on the communication plans for the rollout of the new W-4P tax withholding forms to comply with updated IRS regulations in 2022.