Firefighters' pension board pushes for LAGERS
Wednesday, February 26, 2014
For the second time in as many months, Jefferson City’s Firefighters Pension Board has urged lawmakers to let LAGERS — the state’s Local Government Employees Retirement System — take over management of older pension funds.
“We are a prime example of a system that would benefit from this,” said Norm Robinson, the Jefferson City board’s vice chairman. “The active firefighters are already in LAGERS, as are all the other city employees in Jeff City.”
State Sen. Mike Kehoe’s bill, and a companion version in the House, would allow the transfer only for older pension plans operated by cities and counties that already have current employees on the LAGERS plan.
Keith Hughes, LAGERS’ director, told the Senate’s Seniors, Families and Pensions Committee that the proposals have the unanimous support of the LAGERS board of trustees.
He noted there’s no mandate — local governments must volunteer to transfer the local pension’s operational duties to the LAGERS staff.
“This permits the local governments to get out of the pension business,” he said.
Robinson told the committee he now is helping administer a “closed” plan that will be lose value over the next few decades because it won’t get any new members.
“We currently have 50 retirees, 10 surviving spouses,” Robinson testified. “We have expenses for actuarial services, auditing services, liability insurance — costs that would be mitigated by going into LAGERS.”
Hughes said LAGERS currently administers about $5.9 billion in assets, while the older pension plans that might seek to join LAGERS would add about $1 million to $50 million each.
Robinson noted the Jefferson City Firefighters plan has “$17.6 million in assets, and we’re (fully) funded at 106 percent.”
Full funding is one of LAGERS’ requirements before it will accept a local pension plan’s being added to the statewide system.
“We think LAGERS could do a really great job, because that’s what they do,” Robinson said. “That’s their business, and they do it every day.”
While there are no benefits changes, Committee Chairman John Lamping, R-Ladue, noted the primary advantage to the existing participants is a lower cost structure.
Robinson, who retired after directing the MoDOT/Highway Patrol Employees Retirement System, agreed.
“Our (firefighters pension) fund has an assumed rate of return of 6 percent,” he told the committee. “LAGERS return last year was in the 17 percent range, which probably won’t happen every year.
“But, over time, consistently, you would expect LAGERS — with their broad asset base and diversified investment portfolio — to achieve a much greater return than we could with our dwindling amount.”
No one testified against the proposal.
Last month, Robinson and Hughes had urged a House committee to pass its version of the bill.
The full House gave first-round approval to the plan last week, and needs a final vote to send it to the Senate.
Kehoe, R-Jefferson City, called the proposal “common sense. It’s optional to (retirement) systems, and it just gives them some flexibility.”
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