Wednesday, May 22, 2024

Audit: Louisiana firefighters’ pension system lost $247.4M last year

by BIZ Magazine

(The Center Square) — The Louisiana Firefighters’ Retirement System lost $247.4 million in fiscal year 2022, as the system added 91 retirees that increased benefit payouts by $6.2 million, according to a recent financial statement audit.

The Louisiana Legislative Auditor published a financial statement audit for the Firefighters’ Retirement System last week that covers fiscal years 2021 and 2022.

The report shows that after investment returns hit 25.9% in 2021, the highest in FRS history, asset values fell by 11.1% in 2022, with net investment losses of $253.9 million.

“The losses in fiscal year 2022 are attributable to poor equity market and fixed income performance,” according to the report. “The system experienced net investment gains of $480.4 million in fiscal year 2021, which represents a 773.7% increase over fiscal year 2020. The increase in gains in fiscal year 2021 is attributable to very strong equity market performance.”

The situation meant net position restricted for pensions decreased $247.4 million, or 10.6% in 2022, after increasing by $489.1 the year prior. Employers’ net pension liability for 2022 was $705.1 million, about double the $354.4 million in 2021, representing a 99% increase.

Contributions increased in 2022 by $6.7 million, or about 5% over 2021, due to a 1.5% increase in the employer contribution rate and pay increases for members, which was partially offset by 56 fewer active members. In 2021, contributions increased by $12.6 million, or 10.3%, because of increased employer contributions, pay increases and the addition of two dozen active members.

Benefit and disability payments, meanwhile, increased by $8 million in 2022, or 6.5% from 2021.

“Benefit payments for 91 additional retirees resulted in an increase of $6.2 million, and Deferred Retirement Option Plan (DROP) withdrawals increased by $1.8 million,” the report read. “Benefit and disability payments experienced a net increase of $9 million, or 7.8% in fiscal year 2021 over fiscal year 2020. Benefit payments for 81 additional retirees resulted in an increase of $5.2 million, and DROP withdrawals increased by $3.8 million.”

An investment returns summary included in the report shows the system lost money in all asset classes in 2022 except private equity and real estate, which were up 19.3% and 15.5%, respectively. The biggest investment losses by percentage were Emerging Market Equity, down 26.3%, and International Equity, down 20.6%.

The losses follow a 2021 fiscal year with extraordinary gains of more than 40% in most asset classes, including Domestic — Large Cap, Domestic — SMID Cap, Emerging Market Equity, International Equity, Global Equity and Private Equity.

The report shows participating employers totaled 67 cities, 19 parishes, and 58 special districts in fiscal year 2022, an increase of one special district over 2021.

For 2022, the plan had 2,669 inactive members or beneficiaries receiving benefits, 1,092 members entitled to benefits they’re not yet receiving and 4,623 active plan members and DROP Participants.

The total number of participants in 2022 was 8,384, an increase of 205 over fiscal year 2021.

The plan’s fiduciary net position as a percentage of the total pension liability in 2022 was 74.68%, down about 12% from fiscal year 2021.

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