Based on the recent actuarial report completed by the System’s actuary, the pension benefit funded ratio has increased from 86.6% to 91.5%. The combined funded ratio for pension and health benefits is 85%, up from 80.8% the previous year. This marks the second consecutive year that the combined funded ratio has increased for the System.
Every year a valuation of the LAFPP fund is performed by an actuary. The valuation reports the System’s assets and liabilities and establishes the City’s contribution to the fund for each fiscal year. The positive outcome for the year ending June 30, 2015 was the result of approximately $861 million in net actuarial gains for the year. The City’s combined contribution rate for July 15, 2016 will decrease by 1.97% of sworn payroll, from 46.51% to 44.54%. This contribution rate decrease is due to lower than expected COLA increases for retirees, beneficiaries and DROP members, lower than expected salary increases for active members, and a higher than expected rate of return on the valuation value of assets (after smoothing). The overall unfunded liabilities have decreased from $4.0 billion to $3.2 billion.
On a market value basis, the combined funded ratio is 88%, with retirement benefits funded at 94.6% and health subsidy benefits at 46.9%.
For additional information, please click here to view the actuarial report and presentation.