NEW ORLEANS — The state Legislative Auditor’s Office said a retirement system that provides benefits for officers patrolling the Port of New Orleans is on pace to run out of money as early as 2020 unless changes are made to the pension fund.
The report found that the pension system was about 56 percent funded as of fiscal year 2010, meaning that it does not have enough money to pay the total obligations owed to current retirees.
The report says the fund’s liability for benefits owed is $21.3 million, while the actuarial value of its assets is $11.8 million.
While it’s fairly common for public pension funds not to be completely funded, many pension experts consider 80 percent funding as an ideal benchmark. Overall, Louisiana’s 13 public pension systems — which include state employees, teachers, school employees and police, among other workers — were about 60.5 percent funded in fiscal year 2010, according to a separate report released last month by the Legislative Auditor’s Office.
In October 2010, The Harbor Police Retirement System had 36 active employee members; 36 retirees, survivors and beneficiaries; and three members participating in the Deferred Retirement Option Program, known as DROP, according to the report. At the time, the fund relied on six contractors and eight trustees to perform its administrative tasks.
The Port of New Orleans serves as the “sponsor” of the pension fund, making it responsible for covering any shortfall that could arise. To help stem issues from arising down the line, the auditors recommended the port either increase its employer contribution rate for fiscal year 2011 or consider merging the system under the Louisiana State Employees’ Retirement System.
A merger could prove to be the more likely option, the chief operating officer of the Port of New Orleans, Pat Gallwey, said Monday.
The report was “about what we expected” and that port officials were leaning toward a merger, which would cut the fund’s administrative costs, Gallwey said.