By Brenna Angel
LEXINGTON, Ky. – The latest numbers are out on the unfunded liability of Lexington's Police & Fire Pension Fund. According to an actuarial report released Wednesday, the fund still needs $222 million to fully meet its obligations to retired police and firefighters.
Consultant Tom Cavanaugh told the pension board that contributions and investment income traditionally haven't kept up with the benefits being paid out.
"The benefit structure here is a very solid one. You've got 20-and-out, 2.5% benefit structure, survivor benefits, a COLA [cost of living adjustment]. Those are all very nice benefits that provide a relatively high level of liability. And that's something you just have to finance. There's not too much you can do about it."
The unfunded liability is down about $25 million from where it stood in 2008, an improvement largely attributed to the city's infusion of $100 million to the police and fire pension fund over the past two years.
Longtime board member and police retiree Tommy Puckett says the way disability benefits for police and firefighters are calculated remains a problem, particularly in deciding the severity of a disability.
"If you're determined disabled, if it's one percent, then under the statute we basically have to grant it. And that is an issue."
Puckett says the pension made adjustments to its disability benefits structure in the past, and may be in need of another one. Wednesday's meeting was a first for new Mayor Jim Gray, who says issues surrounding the pension fund will need to be addressed soon.
"I think you saw nods of agreement around the table today. They're tough issues, but that's what public service is about, that's what people in responsible positions do."
The police and fire pension fund currently has about $466 million in assets. An asset allocation study is due next month.