We are writing to inform you that the Wyoming Retirement Board (Board) has decided to invest the assets of the closed Fire A pension plan in a more conservative fixed income strategy. The Board believes that such a conservative strategy is prudent because the Fire A assets continue to decline and are projected to be exhausted in approximately five years. The shortening time horizon means that Fire A is increasingly exposed to sudden failure in the event of a severe market decline. While the more conservative asset allocation will only produce modest investment gains, the action will protect the Fire A funds from such a decline and fairly accurately predict the failure date, likely in August, 2025.
The Board has determined that this action is the best way to protect the corpus of the Fire A funds for the longest term. The action provides an opportunity to urge stakeholders to reach a solution. If the plan fails, the 270-plus retirees and beneficiaries of that plan risk losing their earned retirement benefits.
By way of background, Fire A is a closed pension plan for paid firefighters hired before 1 July, 1981. Subsequent hires were placed in the Fire B plan, with reduced benefits. By 1997, Fire A was deemed to be more than fully funded and the legislature acted to terminate all employee and employer contributions into the plan. The overfunding continued and several benefit increases were subsequently enacted. However, the fund began to have problems following the 2001 recession and the problems accelerated after the recession of 2008, as you can see on the enclosed fact sheet. The fund is currently consuming its investment corpus and is projected to be insolvent in about five years. The plan benefits (including a 3 percent annual benefit escalator) and the lack of contributions are encased in statute. The last major effort to address the problem was HB0051 in the 2014 session. That bill featured some one-time money from the state, a reduction in the escalator provision and resumed contributions from the employers. It passed the House, but failed in the Senate.
The Board has determined that this is the most prudent investment decision to protect the Fire A funds at this time. We certainly hope a solution can be found and intend to notify all affected parties of this investment decision. We stand ready to answer any questions you may have.
Respectfully,
Tom Chapman
WRS Board Chairman
David Swindell
WRS Executive Director
