Louisiana pension funds hold steady after rocky financial year

Published 3:31 pm Sunday, December 17, 2023

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By Victor Skinner
The Center Square

The Public Retirement Systems’ Actuarial Committee approved valuations for four of the state’s public employee retirement systems on Thursday, offering insight into performance in 2023.

Actuary Greg Curran told the committee membership in the Louisiana School Employees’ Retirement System increased slightly while payroll jumped from $320 million to $346 million.

“We’ve certainly seen an increase in payroll across many of our systems,” he said. “That has multiple effects on the cost of the plan.”

With an increase in retired members and survivors, the total costs increased. Accrued liability increased from $2.8 billion to $2.811 billion. After smoothing over five years for losses and gains, the funded ratio increased from 75% last year to 77.44% now, Curran said.

“The system earned a 7.44% on a market basis for the year, and when you do the actuarial smoothing … it’s 7.16%,” Curran said.

Compared to an assumed rate of return of 6.8%, there was a slight gain, he said.

With the Louisiana State Police Retirement System, “we continue to lose troopers,” Curran said. “It’s less than in the past years, but we’re down to 903 troopers” compared to a peak of about 1,300 in the plan.

Despite the decline, payroll for the plan was up about $850,000 to $72.9 million, as were benefits and payments. Curran said that accrued liability for the plan increased from $1.3 billion to $1.4 billion, while unfunded accrued liability stood at $338 million.

He said the plan is funded at 76.42%, down slightly due to assumption changes.

The market rate of return was 7.45%, smoothed to 5.12%, which produced a loss with an assumed rate of return of 6.95%.

Shelley Johnson, actuary for the Louisiana State Employees’ Retirement System, said the number of retirees remained constant, while active members increased by 2.8%. Total payroll grew by 9%, while annual benefit payments were up 1.7% based on an increase in retirees and benefit amounts.

“The majority of the impact of the aggregate payroll was due to actual payroll increases for the current members,” she said.

The plan’s market value assets increased $1.3 billion to about $14.5 billion. The market value yield was 10.63%, or about 6.07% after smoothing. The plan’s overall unfunded accrued liability decreased from $6.974 billion to $6.679 billion due in part to nearly $350 million appropriated by the legislature.

The Teachers’ Retirement System of Louisiana also had an increase in payroll, with slight increases in the number of active members and retirees. The latter increased from 82,600 to 83,525, Johnsons said.

“There was a pretty big increase in the number of terminated vested … we’re at 9,836 terminated vested members,” she said.

The total increase in the payroll of 8.2% was driven by a 10.7% increase for members in higher education, while the K-12 member payroll increased by 7.7%. The plan’s market value of assets increased from $25 billion to $26.16 billion. The actuarial market value increase was 6.79%, which produced a loss when compared to the expected return of 7.25%.

About Timothy Holdiness

Timothy Holdiness is a native of Louisiana and has been published in several state, national and international publications. He has earned two undergraduate degrees in Biology, most recently from Northwestern State University in 2022. Notably, Holdiness was the 2014 Microsoft Office Specialist United States Champion in PowerPoint 2010.

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