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Actuaries recommend $2.1M contribution to Effingham police and fire pensions, propose 15‑year payoff for $15.9M unfunded liability
Summary
Lauterbach & Amen presented valuations showing a recommended 2026 contribution of about $2.1 million for the city's police and fire pension funds, driven by earlier retirements and a modest inflation assumption change; staff said the plan targets payoff of about $15.9 million in unfunded liability over 15 years.
An actuarial representative from Lauterbach & Amen on Monday reviewed the city’s combined police and fire pension valuations and recommended a total contribution of about $2,100,000 for the year — roughly $1,000,000 for the fire fund and $1,100,000 for police — reflecting an overall year‑over‑year increase near 10%.
The firm said the valuation purposefully increased two core assumptions: a slight reduction in average retirement age (based on recent experience) and a modest bump in the long‑term inflation assumption (from 2.25% to 2.5%), which together accounted for roughly $76,000 of the increase. Actuarial experience items (new hires, a disability claim, a death with spouse benefit) added roughly $82,000. Investment returns provided a partial offset; the 5‑year smoothing produced a net $30,000 decrease in the recommended contribution from returns.
Key figures presented: unfunded liability ≈ $15,900,000; recommended contribution ≈ $2,100,000; target payoff period 15 years (aiming for full funding under the recommended schedule); current combined fund market values were reported in the presentation as roughly $35.2M at start of year and $38.1M at year end with 5‑year averaged returns near the mid‑to‑9% range for the two funds in the reporting year.
Council questions focused on intergenerational fairness and whether the city is “kicking the can down the road.” The actuarial representative said the 15‑year amortization increases the principal share of payments relative to longer schedules and cautioned that any future legislative changes to state retirement tiers or a negative market year could alter the expected path. The representative noted the state currently requires 90% funding by 2040 but said the city’s plan aimed for 100% within the 15‑year payoff schedule.
There was no formal council action on the valuation at the meeting; pension boards had already approved the recommendation and staff included the actuarial figures for the council’s awareness and forthcoming levy and budget decisions.
