Kevin Carey, a credentialed consulting actuary with Neihardt, told the Vanderburgh County Council on July 2 that the Vanderburgh County Sheriff’s Office pension plan posted an approximate 10.1% net investment return in 2024 but still shows a funding shortfall that could require additional county contributions.

Carey said the actuarially determined contribution, or ADC, for the pension plan as of Jan. 1, 2025, is $2,020,487, about 17.8% of expected payroll. He said the market-value funded percentage on that date was about 77.8% and the benefit plan — which covers ancillary death and disability benefits — is essentially unfunded.

The funding gap matters because of state oversight rules that flag plans which miss the ADC multiple years. “If you meet the ADC in 2025 for both plans, you would most likely fall off of the state presentation list in 2026,” Carey said, noting the pension plan met its ADC in some recent years but missed it in others.

Carey described an expected shortfall for 2025 of roughly $145,000 for the pension plan based on contributions currently scheduled and an estimated $20,000–$25,000 shortfall for the benefit plan. He said the county’s expected contributions for 2025 — including employer payroll percentages (14.5% this year, 16% next year) and about 2% from other sources — would total roughly $1,870,000 against the computed ADC.

The actuary showed projections under different assumptions. Using the plan’s current 7.25% discount rate yields lower immediate contribution needs than a 6.5% rate would; lowering the discount rate to 6.5% would increase computed liabilities and raise the ADC and required cash contributions. Carey said the state oversight committee has questioned use of a 7.25% assumption and that the county must be comfortable defending whatever rate it uses.

Council members asked about options for retirees, including cost-of-living adjustments (COLAs). Carey said adding a COLA would increase plan costs unless additional contributions are provided. He also explained how the county’s amortization schedule affects when legacy unfunded liabilities would be paid down, saying the projections show the legacy portion could be paid off around 2047 if assumptions are met and scheduled contributions are made.

Council members and Carey agreed to obtain quarterly statements for the first half of 2025 and to schedule a follow-up briefing before the 2026 budget process to refine contribution estimates and discuss longer-term funding options.

Carey emphasized risk factors: investment performance and demographic changes could materially change funding needs. He recommended the council and the pension board consider options to create a more predictable ongoing funding stream rather than relying on ad hoc supplemental payments.

The council did not take a formal vote on any changes to the pension plan at the July 2 meeting; the presentation generated a direction to request updated statements and to schedule further discussion before budget adoption.