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Korn Ferry recommends assumption changes that raise 2024 valuation impact by $2.03 million for Bedford County pension fund
Summary
Korn Ferry actuary Michael Spadaro presented a 2024 actuarial valuation to the Bedford County Retirement Board recommending assumption changes — including a 30-year amortization restart and updated mortality tables — that increase the 2024 valuation impact by $2,034,651 and could raise employer contribution needs.
Michael Spadaro, actuary for Korn Ferry, told the Bedford County Retirement Board on Aug. 20 that the firm’s 2024 actuarial valuation includes recommended assumption changes that would increase the immediate actuarial impact by $2,034,651.
The recommendation is significant because it alters the county’s Actuarially Determined Contribution (ADC) calculation — the combined amount of normal cost (ongoing cost for current employees) and amortization payments (to pay down unfunded liability). Spadaro reviewed demographic data, explained that the valuation uses an asset-smoothing method based on Dec. 31, 2023 figures, and said the recommended assumption updates produce a higher near-term ADC.
Among the proposal items, Korn Ferry recommended restarting a 30-year amortization schedule, revising the mortality table (which the actuary said increases the ADC while reflecting more up-to-date longevity assumptions), and capturing differences in member deductions. Spadaro also noted that changing the interest assumption (he cited a potential lowering toward 4%) would alter long-term costs and funding strategy.
Spadaro outlined possible funding responses to the higher ADC: increasing employer contribution rates or reducing benefits for future hires (for example, adjusting benefit class or other plan provisions). He recommended the board formally adopt the proposed assumptions for the 2024 valuation, continue discussion of broader funding solutions, and request a Korn Ferry estimate for the 2025 ADC.
At the meeting the board took two procedural actions: the board approved the minutes of June 5, 2024 (motion by Commissioner JR Winck, seconded by Commissioner Deb Baughman), and later adjourned on a motion by Commissioner JR Winck, seconded by Melissa Cottle, at 2:35 p.m.
The board did not adopt the assumption changes during this meeting; Korn Ferry’s recommendations were presented for the board’s consideration and the actuary requested formal adoption as the next step.
