Trustees of the Arkansas Public Employees Retirement System voted last week to increase its cost to the state and local governments by $15 million a year to recoup significant investment losses in fiscal 2009.
The move will boost the government contribution rate to 13.47% of payroll, effective July 1, 2011, from the current 12.46%.
Trustees raised the rate to the current level from 11% in July after consultant Callan Associates said the system’s investments dropped to $4.43 billion in fiscal 2009, down $1.3 billion from fiscal 2008.
The consultant said the value of the system’s investments in fiscal 2010 rose almost 12% to $4.9 billion.
The pension system’s unfunded liabilities totaled $1.9 billion when fiscal 2011 began July 1, according to a report by Gabriel, Roeder, Smith & Co.
Trustees were told that the governmental contribution could go as high as 16.7% of payroll in fiscal 2015.
Pension system director Gail Stone urged trustees to review the benefit structure.
She said the state could save $21.2 million a year by lowering the annual cost-of-living increase to 2.5% from the 3% level now used. The system paid $318 million in pension benefits in fiscal 2010.
