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Leesburg staff outline pension funding status and plan to shift savings into employee 401(k) match
Summary
City staff reported police and fire pensions below full funding and a 101% funded general-employee pension driven by actuarial changes; staff proposed shifting surplus funding over time into a stronger defined-contribution match to improve employee retirement savings.
Staff member (S2) told commissioners at the July 14 FY27 budget workshop that Leesburg’s police pension is funded at about 77%, the fire pension about 85% and the general-employee (GE) pension at roughly 101%, a result S2 attributed to a recent change in the actuarial mortality assumption.
That funding picture framed a longer discussion led by a staff speaker (S1) on how benefit levels and actuarial assumptions determine a plan’s funded status. “If you change the levers on a benefit level, you’re gonna change the funding mechanisms,” S1 said, warning that increasing benefits without corresponding contributions would lower funded ratios.
S1 described a multi-year strategy to reallocate money away from the closed GE defined-benefit plan into the city’s defined-contribution (DC) 401(k)-style program as the GE plan stabilizes. S1 said the city adopted an 8% employer DC contribution last night and is aiming for 10% in the near term, with a possible structure of a 10% automatic employer contribution plus a 1:1 match up to 3% so that employees could see about 16% of payroll going to retirement between employer and employee contributions.
S2 provided program details: police employees currently contribute about 7.65% while the city contributes about 24.09%; fire employees contribute about 7.5% while the city contributes about 34.8%. Staff flagged a roughly $200,000 projected increase in the city’s police-pension contribution for FY27 and a roughly $123,000 increase for the fire pension.
Commissioners discussed employee participation in the voluntary match. Committee member (S4) said participation in the 1:1 match is low and urged additional education; staff said Melissa will begin outreach to explain the new benefit levels and to encourage take-up.
Why it matters: pensions and retirement design affect long-term liabilities and annual budget pressure. Staff recommended pacing any change so the actuarial soundness of closed defined-benefit plans is preserved while increasing DC support to improve recruitment and retention.
Next steps: staff said they will report back on participation efforts and the fiscal impact of any further DC increases; no formal action was taken at the workshop.
