Long-closed Jax pension plan still under 45% funded, expected to be made whole in 31 years

A Jacksonville police and fire pension plan closed to new entrants nearly a decade ago is still well under halfway funded, despite a good year of investment returns.

Deputy Director Steve Lundy told the City Council Finance Committee that the funding ratio of 44.1% at the end of 2024 is “slightly down” from the 44.7% mark a year before. The plan is expected to be fully funded by 2026, roughly four decades after it was closed to new entrants in 2017.

Nevertheless, Lundy said the funding policy is working “very effectively.”

“Our investment returns were outstanding at 20.4%, far outpacing our assumed rate of 6.5%, and our pension health remains stable, although the funded ratio did slightly decrease,” he told legislators.

A half-cent sales tax will start funding the pension liability in 2031, which is an extension of the current Better Jacksonville Plan tax.

The Lenny Curry administration sought to repurpose that surtax to the pension liability previously. But given the commitment to the Jaguars’ stadium renovations, current Mayor Donna Deegan and the City Council agreed to move the sales tax back to physical infrastructure to defray stadium build costs of $775 million.

Surtax proceeds are down year over year, to 2.4% from 9.3% the year before. But the overall number is smoothed to 6% to dampen volatility in the metric.

Investment returns make up for the surtax shortfall though, Lundy said.

“Over the last five years, our pension funds average rate of return was 8.7%, and the 10-year average return was 7.4%, which are both above the assumed rate of return of 6.5%, and this is very good news,” Lundy said.

The police and fire plan is one of three legacy pension funds in the city, along with the correctional officers’ pension plan and the general employees’ plan. All three were closed to new entrants as a consequence of pension reform approved by the Legislature last decade, which put employees on a defined contribution plan for a number of years. However, the Deegan administration and the Council approved the Florida Retirement System as an option for police and fire starting in 2026.