Friday, April 25, 2025

LGERS Board of Trustees Sets Rates for Local Governments’ Pension Contributions

Raleigh, N.C.
Apr 25, 2025

The Local Governmental Employees’ Retirement System (LGERS) Board of Trustees has voted to set new contribution rates that local government agencies must pay into the N.C. Retirement Systems Division for employee pensions, effective July 1.  

That was among a number of actions taken at the quarterly meeting of the LGERS and Teachers’ and State Employees’ Retirement System (TSERS) boards of trustees on Thursday, April 24.

The LGERS board establishes the rates for about 900 employing entities such as towns, cities, tourism development authorities, county ABC boards and fire departments. Rates are subject to change every year, and have been rising steadily in recent years. That is due primarily to the 2008-2009 financial crisis, investment returns since then, several decisions to lower the assumed rate of investment returns to give a more accurate accounting, and significant salary increases for local governmental employees during and since the 2020-2021 pandemic.

LGERS board members voted during Thursday’s meeting on a staff recommendation to set the agency contribution rates toward retirement benefits pursuant to LGERS’ ECRSP policy. The ECRSP, or Employer Contribution Rate Stabilization Policy, was put in place to ensure actuarially correct contributions are being made by local governments to fund the pension system.

The new rates starting July 1 were set at 14.35% of compensation for non-law enforcement officers, up from 13.60% for the 2025 fiscal year ending June 30, and 16.10% of compensation for law enforcement officers, up from 15.10% in fiscal year 2025.

North Carolina has a long tradition of fully funding the retirement systems. The General Assembly has delegated this authority to the LGERS Board for local governments. The LGERS Board follows its ECRSP policy. The local government system has been fully funded for 85 years and predates the state system by two years.  

By law, members of the Retirement Systems contribute 6% of pay each month to their pension. That is combined with employer contributions and investment returns to make up a lifetime monthly benefit when eligibility requirements are met.

In other action, the LGERS board approved the Thomasville Tourism Commission’s application to become a participating employer in LGERS.  

The board appointed Dean Coward of Jackson County; Gary Whitman of Harnett County; Debra Poe of Ashe County; Benjamin Bobzien of New Hanover County; and David Cates of Wake County to the Firefighters’ and Rescue Squad Workers’ Pension Fund Advisory Panel. Mike Williams of the Department of Insurance will continue to serve on the panel.

The TSERS board received a report showing 54 of 213 charter schools participated in TSERS in the 2024-25 school year. Since 2016, nine charter schools have withdrawn from TSERS. Six of those paid their liabilities to TSERS in full. Three schools have a balance of $3 million owed.

The LGERS and TSERS boards received several annual reports regarding:

  • Supplemental retiree insurance, offered through United Healthcare to retirees and benefit recipients for dental and vision coverage, and identity theft coverage, offered through LifeLock. Pierce Insurance manages the programs. Dental coverage is provided to 143,737 individuals, vision to 123,660, and identity theft to 30,954.  
  • Investment management, including information about an asset liability study covering a 5-year experience span, to be presented to the Investment Advisory Committee in November.  
  • Legislative updates, including discussion of the State Investment Modernization Act. If passed, the initiative would remove sole fiduciary authority over investments from the state treasurer. Instead, the responsibility would shift to a five-member board chaired by the treasurer, with other members appointed by the Senate, House, governor and treasurer. The change is intended to increase investment returns. Among prospective advantages would be preventing or reversing governmental employers’ increases in pension contribution rates.  

 

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