Actuary: Freeport police and fire pensions remain well-funded; contribution projections depend on upcoming assumption decisions

An actuary for Freeport’s police and fire pension plans gave the committee a year-end snapshot showing strong market returns in 2024 but lower actuarial (smoothed) returns, and highlighted choices that will affect next year’s employer contributions. Jen Turk, an actuary with Nyhart, told the Committee of the Whole that if measured by market value the funds saw about 10% returns for 2024, while the actuarial (smoothed) rate of return used for contribution planning was about 4.5%. “The state wants you to fund to 90% by 2040,” Turk said, describing the state standard the plans consider when setting contribution policy. Turk said the consolidated funded percentage moved from “just a hair under 98%” in the prior valuation to about 96% under the current assumptions. She described how the actuarial smoothing approach reduces year-to-year volatility but can lower the reported funded percentage when recent returns lag the plan’s assumed investment rate. On contribution amounts, Turk told the committee that on the fire plan the contribution would increase under current assumptions and that, if the Fire Board and Police Board adopt a set of alternative assumptions the actuary presented, the fire contribution would be about $791,000. On the police side, she said the contribution could be about $482,000 under current assumptions and about $430,000 if the alternative assumptions are adopted. Turk said board meetings on assumptions were scheduled later in the month. Turk also reviewed participant counts, turnover and 3% cost-of-living adjustments that increase benefit payments for retirees and beneficiaries. The transcript records no formal council action or vote on the valuation; Turk said the boards would finalize assumption choices later in the month. Committee members asked no substantive policy questions during the presentation in the recorded transcript.