Luzerne County’s employee pension fund continues to grow to record highs through investment returns, but an estimated $13.7 million subsidy will still be required next year, officials said at Wednesday’s county Retirement Board meeting.
An annual county subsidy has been necessary for more than two decades to address a gap that had emerged between fund assets and future pension payment obligations.
The gap started forming because money put into the fund from investment earnings and employee contributions was not keeping pace with the growth of existing and eventual pension obligations. The problem was exacerbated when the fund’s market value dropped from $203.5 million in 2000 to $141 million in 2003 as county officials disagreed over the best way to manage the plan.
The county’s pension fund subsidy is $13.6 million this year, said county Budget Finance Division Head Mary Roselle.
At Wednesday’s meeting, the board discussed a new actuary communication estimating the subsidy will be $13.7 million for 2026.
Roselle said Thursday the proposed 2026 county budget set the pension subsidy at $14.3 million, which is higher because it assumes all county positions are filled with no vacancies.
As a result, county council may opt to decrease the budgeted pension amount based on the actuary’s estimate, she said.
Approximately 77% of the subsidy is paid through the general fund operating budget, with the rest coming from human service departments and other offices largely or entirely funded by the state and federal government or other outside sources, Roselle said.
Progress has been made closing the pension fund gap between assets and liabilities. According to the county’s outside auditor, the fund’s liability decreased from $106.1 million at the end of 2023 to $95.2 million at the close of 2024.
Pension fund investment earnings that exceed the benchmark 6.75% return rate help whittle down the liability and could further reduce the county’s annual subsidy, officials said.
The investment return was 9.8% through September this year, with $30.5 million in net investment earnings, said fund advisor Richard Hazzouri, of Morgan Stanley, said Thursday.
The pension fund ended the 2025 third quarter with a record high value of $341.2 million, Hazzouri said. The fund value was $319.4 million at the start of the year.
The goal is maximizing returns without exposing the public fund to undue risk — all while making sure enough cash is always available to cover ongoing pension payments, Hazzouri reiterated.
A total of $8.6 million in payments to retirees were made this year to date, through September, he said.
Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.