Pension Improves, But Still Underfunded by $5.2 Million

In this file photo, the Key Biscayne Fire Department is seen, July 26, 2019. The Key Biscayne Village Council is considering a $2 million payment into the pension plan covering public safety personnel to lessen the amount of unfunded liability in the plan (Key News/Tony Winton)

The pension plan covering Key Biscayne’s police and firefighters closed an underfunding gap in 2018, but the plan still has up to $5.2 million in unfunded liabilities, according to a report released last week by plan actuaries. 

The slightly better-than-projected performance could open up about $100,000 in the 2020 Village operating budget, as it came in below Village Manager Andrea Agha’s estimate to meet minimum funding levels. The line item is set to be discussed at the final Village budget hearing Sept. 24. 

However, the Village Council has yet to hold a separate, final vote on a fund transfer of $2 million to the pension which is intended to further close the unfunded liability gap.  Some Council members have indicated they do not support the transfer. 

Public safety workers pay for the pension by deferring future wage increases as well as having deductions made from paychecks. The benefit has sometimes been a sticking point in collective bargaining talks with fire and police unions.

Village workers who are outside of Key Biscayne’s public safety departments do not receive pensions. 

Over recent years, Key Biscayne has set a goal of making the plan more fiscally conservative by gradually reducing the rate-of-return assumption to 7.5% from 8% and increasing the funded ratio. The plan is now 89% funded, improving slightly from 87% in 2017. 

In 2018, pension actuary Peter Strong said the plan reduced the gap by $320,821, mostly because of strong investment returns of 8.2%. The plan has had a string of good years, but like other systems, suffers losses in market downturns. 

There are currently 66 active members of the plan and 33 retirees.