Korn Ferry: Bucks County pension 91.1% funded; COLA would push 2025 costs far higher
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Summary
Korn Ferry presented the county's actuarial valuation and estimated the 2025 actuarially determined contribution (ADC) at roughly $17 million; adding a 3.4% cost-of-living increase (COLA) would raise 2025 funding needs by about $18 million more, putting combined contributions above $35 million. The board approved the ADC for 2024 on a voice vote but did not adopt a COLA.
At a Dec. 18 meeting of the Bucks County Retirement Board, actuary Dave Reichardt of Korn Ferry told board members the county's retirement plan is in "very good shape" but not fully funded, reporting a 91.1% funding level from the latest valuation and an estimated funding shortfall "about $95 million." Reichardt said the actuarially determined contribution (ADC) for 2025 would be "a little bit more than $17,000,000."
Reichardt said the cost of granting a cost-of-living adjustment (COLA) tied to the annual consumer price index (3.4% this year) would add "a little over $18,000,000" in 2025, and that combining the ADC and the COLA would place required contributions "over $35,000,000." He explained why COLA funding is costly: the plan must fund the increase not only for current retirees but for future years as well, and previous COLA-related liabilities (for example, from 2018) are still being amortized. "That is correct," Reichardt answered when asked whether one-time funding is necessary because the increase will carry forward for each retiree's lifetime.
Board members asked for more granular impacts. Reichardt said the plan pays about $60 million annually in pensions and that an across-the-board COLA would increase payroll by roughly $2 million per year (recurring), but stressed the cumulative upfront cost is high because the annual increase would be funded for each beneficiary over their remaining life (he used a 20-year illustrative period). When asked about whether the county had borrowed to fund prior COLAs, Reichardt confirmed the plan still has prior COLA costs on the amortization schedule.
Before hearing the actuarial presentation the board voted to approve the certified ADC tied to the 2024 valuation: Schedule F showed an ADC of $13,699,377 required to maintain solvency; the motion carried on a voice vote. The board also set the 2025 regular interest credit on member contribution accounts at 4% in line with the statutory 4% to 5.5% range under Act 96 of 1971.
No formal COLA was adopted at the meeting; board discussion focused on understanding the actuarial mechanics and the tradeoffs of one-time funding versus amortization. Board members asked staff to clarify average per-pensioner increases and other distributional effects in follow-up materials before any decision on a COLA.
