The contributions paid by members and their employers have held steady since 2014 and, at this time, are projected to remain the same in 2017 and 2018. The total combined contribution rate (employers and employees) is currently at 24.16% of pensionable salary and it is the Board’s intent that it not exceed 25%. Employers match employee contributions and pay an extra 1%.
Part of the contribution rate paid by employers and members goes to pay off the unfunded liability of the Plan, which are called special payments. These are amortized over 15 years. As these special payments are paid off and the unfunded liability is eliminated, the Plan will be more affordable in the future. Assuming there are no further unfunded liabilities that arise as a result of unforeseen circumstances, eventually contributions will be reduced to cover only the current service costs of the Plan. Current service is the cost to pay a monthly pension to the currently-retired members, as well as the cost of estimated future pensions to members who are actively contributing to LAPP.
Of the 24.16% combined contribution rate we have today, current service costs account for only 17.94%, and the rest goes to the unfunded liability.