CERS employer contribution rates to decrease in FY 2024
Employers contributing to the County Employees Retirement System (CERS) will pay a lower rate next fiscal year. The CERS Board of Trustees voted at its December 5 meeting to approve a rate of 23.34% for CERS nonhazardous employees, down 3.45 percentage points from the current contribution rate, and a rate of 43.69% for CER hazardous duty employees, down 5.9 percentage points.
The rates will take effect with Fiscal Year 2024 that starts July 1, 2023.
The 2022 actuarial valuation completed by the GRS Retirement Consulting Actuaries found that active membership and covered payroll increased over the past year for both funds, with a 6.4% increase in covered payroll for nonhazardous employees and a 7.4% increase for hazardous employees.
“This is significant in terms of the funding and the health of the system,” GRS consultant Danny White said during a presentation at the CERS November board meeting. “Even though the [contribution] rate goes down, the dollar amount you’re collecting is going to be a little higher in the case of the pension fund.”
A decrease in Medicare premiums for retirees aged 65 and older meant significantly less cash had to come out of the CERS insurance trust fund this fiscal year. Both nonhazardous and hazardous insurance funds are now funded at 100% or better.
“This is the big story of the valuation this year... this has the most meaningful impact on changes in funded status and contribution rates,” White said.
CERS board member Bill O’Mara said while the lower contribution rate for next fiscal year is great news, he wondered if employers could expect an increase in future years.
“Is there going to be a yo-yo effect when we’ve used up this [insurance] overfunding and rates start to go back up?” O’Mara asked.
White said that is a possibility but noted that CERS generally has more flexibility to affect and adjust health insurance benefits than the pension funds.
According to the actuarial valuation, the CERS nonhazardous pension system has a funded ratio of 52% , while the hazardous system is 47.6% funded.