Firefighter pension board accepts Oct. 1, 2024 actuarial valuation; estimated FY24–25 contribution about $454,000

The Firefighter Pension Board on Tuesday, Jan. 14 accepted an actuarial valuation prepared as of Oct. 1, 2024, that calculates a minimum required contribution for the 2024–25 fiscal year of about $454,000.

The valuation, presented by the plan actuary Chuck, reports $10,560,000 in market-value assets as of Oct. 1, 2024 (net of money in the plan's share account), an actuarial value of assets of $10,090,000 after a five-year phase-in of investment gains and losses, and approximately $469,000 of unrecognized gains. The report shows an estimated covered payroll of $652,000 and a minimum required contribution rate of roughly 69.64% of pensionable payroll; the dollar estimate in the report was $454,000. That dollar estimate and the percentage include the state “chapter” contribution, which the actuary said was about $158,638 for the prior year.

The actuary told trustees the plan is closed to new participants and is a small, rapidly aging closed group of about nine active employees; because payroll is small relative to liabilities, contribution rates expressed as a percentage of payroll can appear large and may rise further as headcount declines. On a market-value basis the report shows the plan more than 100% funded for accrued benefits (the report’s market-value funded ratio is a little over 113%). The actuary said the plan’s current expectation is that, as active members retire or terminate, the funding requirement should decline materially and may disappear when the last active member leaves, though adverse experience in any given year could produce a temporary contribution requirement.

Board members asked about the asset smoothing period. Trustee Steve Ham asked whether a three‑year smoothing could be used rather than the current five‑year phase‑in; the actuary said three‑year smoothing is an option but cautioned the state division of retirement reviews methods and may push back if a change appears intended to lower the city’s contribution solely for optics. Trustee Terry Power asked whether shorter smoothing accelerates recognition of gains; the actuary answered that a shorter period does recognize gains faster but also reflects losses faster and that, over time, differences between 3, 4 and 5 years often are modest.

After discussion a trustee moved to approve the valuation report as presented; the motion was seconded and approved by voice vote. The board then made the related annual disclosure of the plan’s investment return assumption: trustees voted to set the disclosure and related return assumption at 6.75% (6 3/4 percent) for the coming year, the move carried by voice vote.

The actuarial valuation remains a draft until the board formally approves and accepts it; the actuary noted that once accepted the office has 60 days to file the valuation with the state division of retirement. The actuary also described a modest advanced employer contribution credit (reported in the valuation as about $22,179) that offsets small timing shortfalls in some years.