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Actuary: Ferguson pension funded ratio fell to 92% after missed contributions; city plans additional payments
Summary
An actuarial valuation presented to the council showed the pension plan’s funded ratio declined to about 92% from more than 100% due largely to missed contributions and benefit changes; the city said it has budgeted extra payments to restore funding.
Actuary Greg Stumpf presented the city's pension valuation results and told the council the plan’s funded ratio declined to about 92% in the most recent valuation, down from over 100% in earlier years.
Stumpf said the plan’s accrued liability increased while asset gains were modest, producing an unfunded liability of roughly $2.6 million. He identified several contributors to the higher employer contribution requirement: a larger normal cost due to payroll increases, missed employer contributions in fiscal 2023 and a 4% cost-of-living adjustment for retirees amortized over 10 years. Stumpf said investment returns over the five-year smoothing period produced net gains of roughly $1.5 million.
The nut graf: Stumpf described the fall in funding as manageable relative to many public plans but said missed employer contributions in one fiscal year materially raised the actuarially determined employer contribution (ADEC).
Stumpf told council members that while the funding ratio is lower than in recent years it remains strong compared with many public plans. He described the mechanics of asset smoothing and noted about $850,000 in unrecognized gains that should help future results.
City officials responded in the meeting. City staff said the budget includes funds for additional pension contributions in the current fiscal year (the manager said $7.75 million was set aside in the budget for pension) and that payments made and planned should restore the plan near 100% over the coming year. Stumpf said expected long-term contribution rates should be stable and would gradually approach the underlying cost of benefits.
Ending: Stumpf and staff said they will continue annual monitoring and present updated valuations; council members asked for quarterly or periodic briefings from the investment manager as needed.
