Actuary recommends modest assumption changes; board told demographic updates could lower funded ratio

The Office of the State Actuary on Sept. 24 advised the Law Enforcement Officers' and Fire Fighters' Plan 2 Retirement Board to raise three long-term economic assumptions by 25 basis points and presented preliminary demographic assumption changes that, together, could leave the plan roughly 100% to 102% funded under projected 2025 conditions.

The recommended economic changes are a 0.25 percentage-point increase to the inflation assumption, a 0.25-point increase to the general salary growth assumption and an increase in the investment rate-of-return assumption to 7.25%. Sarah Baker, actuary with the Office of the State Actuary, told board members these changes would be reflected in the 6/30/2025 actuarial valuation and could be adopted by the pension funding council by Oct. 31 for some systems.

Why it matters: economic and demographic assumptions determine contribution-rate calculations, measured funded status and long-term plan affordability. The actuary said the changes would increase the plan's projected funded ratio by about 2 percentage points (driven mainly by the higher rate-of-return assumption), while the demographic changes…