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Board adopts stepped approach to member contribution rates, aiming for 9.87% minimum by 2032
Summary
After hearing staff and Milliman, the board voted to adopt option 3: stepping into a new minimum member contribution rate of 9.87% by 2032. Staff projected that immediately adopting the aggregate rate could add about $51 million to the state biennial budget.
The Lehi Plan 2 Board voted to adopt a stepped approach to member contribution rates that phases the minimum rate to 9.87% by 2032.
Jacob White, staff to the board, explained the trade-offs between the "aggregate" rate, which fully reflects recent plan experience and is more volatile, and the "minimum" rate, which the board has used historically to promote stability. White said the aggregate rate for the next biennium would be 10.47% while the minimum rate would be 9.87% and noted "it would be a $51,000,000 impact to the state budget over the biennium" if the board immediately adopted the aggregate rate.
After questions and discussion about short‑term budget impacts and long‑term funded status, a board member moved to adopt option 3 (the stepped schedule to reach the new minimum rate of 9.87% by 2032); the motion was seconded and approved by voice vote.
Board members described option 3 as a way to smooth increases for employees, employers and the state while preserving flexibility to revisit rates if future valuations or state fiscal conditions change. The board directed staff to proceed under the adopted rate table and to revisit projections as new valuation data are available in October.
