Wednesday, June 12, 2024

Louisiana firefighters’ pension fund rebounded slightly in 2023

by BIZ Magazine

(The Center Square) — According to a recent audit, the Louisiana Firefighters’ Retirement System bounced back in 2023 following significant losses in 2022, primarily due to changes in the market.

An audit report released by the Louisiana Legislative Auditor in December provides a status update on the Firefighters’ Retirement System for fiscal years 2022 and 2023 that shows while the system’s investments performed better in 2023, total pension liability increased by about $141 million.

Overall, the system’s net position restricted for pensions increased by $193.3 million, or about 9.3% between 2022 and 2023, after a decline of $247.4 million the year prior. The total restricted for pensions returned to 2021’s $2.3 billion in 2023 after dropping to $2.1 billion in 2022.

The rate of return on the system’s investments was 9.5% in 2023, up significantly from the negative 11.1% rate in 2022, but well below the 25.9% rate in 2021. The shift produced net investment gains of $186.4 million in 2023, following a $253.9 million loss in 2022. For both years, the system’s board of trustees set the assumed rate of return at 6.9%.

“The gains in fiscal year 2023 are attributable to positive equity market performance,” auditors wrote. “The losses in fiscal year 2022 are attributable to poor equity market and fixed income performance.”

Contributions to the system increased by $4.3 million or about 3.1% in 2023 over 2022 “due to pay increases for active members, as well as an increase of 49 active members,” according to the report.

The 2023 increase followed a 5% increase in 2022 tied to a 1.5% increase in the employer contribution rate and pay increases for active members, offsetting some by a decline of 56 active members.

Benefit and disability payments had a net increase of $1.3 million in 2023, or about 1%, after accounting for 75 additional retirees that boosted payments by $6.4 million and Deferred Retirement Option Plan withdrawals that declined by $5.1 million from 2022.

Those payments had increased by $8 million or about 6.5% in 2022 over the year prior due to 91 additional retirees and a $1.8 million increase in Deferred Retirement Option Plan withdrawals.

Auditors noted a one-time lump-sum supplemental payment to qualifying retirees approved by the Legislature last session came with a total cost to the system of $5.9 million.

Total pension liability in 2023 was $2.9 billion, which resulted in an employers’ net liability of about $653 million after accounting for the plan’s fiduciary net position of about $2.3 billion. The calculations, based on actuarial assumptions and estimates, produced a funding percentage of about 78% in 2023, up from 2022’s 75%.

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