This newsletter contains information regarding the administration of LAGERS retirement benefits.
Annual Valuations Now Available Online
Valuations Include Contribution Rates for Fiscal Years Starting in 2017

LAGERS' actuaries annually evaluate the rates of each LAGERS employer, and depending on the experience of the LAGERS system and your personnel, make slight adjustments to your rate to ensure benefits are being funded at the appropriate level.   Your Annual Valuation is the report LAGERS' actuaries release containing their evaluation of your employer and the new rates that will become effective for your 2017 fiscal year start.  Click here to learn more about what's inside your Annual Valuation.

Your Annual Valuation is now available for viewing and printing on ECLIPS E. This valuation contains your new contribution rates beginning on your 2017 Fiscal Year .

How To Access Your Valuation in ECLISPE:

1.Under the "Agency Details" tab in ECLIPSE, Click 'Profile'

2. Within your 'Profile,' open the "Valuation Reports" tab

3. Check the box for the year you wish to view (2016 will contain your FY2017 rates)

4. Once you have selected your year, click the "View Annual" button above.

5. Your web browser may prompt you to either open or save the PDF

6. FY 2017 Rates can be located on page 12

 You will NOT receive a paper copy of your Annual Valuation
New Actuarial Assumptions and Their Impact on Your 2017 Contribution Rates

At the March 25th meeting, LAGERS Board of Trustees approved new actuarial assumptions to be used in the calculation of employer contribution rates.  These new assumptions will likely result in an increase to your 2017 employer contribution rate(s).

The increases in 2017 are primarily a result of changes to the disability and mortality assumptions.  An actuarial experience study found that LAGERS retirees are living longer than they did a few years ago and are projected to continue living longer into the future.  This means that benefits will be paid to retirees for a longer period of time, and will require a contribution adjustment to ensure that there are enough funds set aside to pay for these longer retirements.  The study also concluded that the number of disability retirements have also increased and so upward adjustment to the disability component of your contribution rate will also be made depending on which departments your employer provides LAGERS coverage for (general, police, and/or fire) and the elected benefit program of your employer.

LAGERS Board of Trustees follows a funding policy that requires an experience study to be completed every five years by LAGERS’ actuaries reviewing each of the assumptions used in calculating employer contribution rates.  The purpose of this study is to determine if the assumptions used in the calculation remain appropriate given past and anticipated experience.  LAGERS takes this process very seriously in order to ensure that future benefits are being properly pre-funded so that members today and tomorrow can continue to enjoy the security of their hard earned retirement benefits.

While it is likely that for the first time in five years many employers will see an increase instead of a decrease in their contribution rates, LAGERS contribution rates are designed to remain stable over the long-term to allow local municipalities predictability in budgeting for these important benefits. Other experiences of your employer, such as turnover and pay raises, can also create upward or downward pressure on a contribution rate, as well as the investment performance of the LAGERS portfolio; therefore every employer will have a slightly different rate experience in 2017.

If your employer’s rate needs to increase next fiscal year, a 1% annual cap is placed on the rate, so that no employer in 2017 should expect more than a 1% increase to contributions rates (unless you are making an upgrade).  If, however, an employer’s rate needs to increase more than 1%, the rate will continue to rise 1% each year until it reaches its true rate.  

LAGERS Bloggers
How to Make an Unfunded Liability Disappear

Rolla Municipal Utilities wanted to improve the benefit package for its workers in an effort to help recruit and retain quality employees.  So in 2008, the board of RMU decided to enhance LAGERS benefits to the 2% multiplier.

“In 2008 we had a very well-funded plan, another reason it made the change a little easier at that time was the fact that we were slightly overfunded,” said Rodney Bourne, General Manager of RMU.

Being overfunded basically means that RMU had completely paid off its unfunded liability and, at that time, had slightly higher assets in LAGERS than it had liabilities for retirement benefits.  But that all changed when the recession hit later that same year.

“In the combination of changing plans and the markets going down, we went from being slightly overfunded to significantly underfunded in a matter of two years,” Rodney said.  “A lot of that was attributed to the markets.”

RMU again had an unfunded liability.  And even though LAGERS provides a sound, structured method to pay of this liability, RMU had other plans.

“We knew the markets, over time, would recover but what we chose to do is to make additional payments toward our unfunded accrued liability to help in that recovery,” said Rodney.

Continue Reading to find out how RMU addressed their unfunded liability.