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1 <br /> ORANGE COUNTY <br /> NORTH CAROLINA <br /> FINANCE and ADMINISTRATIVE SERVICES <br /> Gary Donaldson,CTP, Chief Financial Officer I gdonaldson@orangecountync.gov I PO Box 8181, Hillsborough, NC 272781 919.245.2453 <br /> INFORMATION ITEM <br /> To: Board of County Commissioners <br /> From: Gary Donaldson, Chief Financial Officer <br /> Date: February 20, 2025 <br /> Re: FY 2025 Pension Spiking Review <br /> During the 2014 General Assembly session, Contribution-Based Benefit Cap legislation was enacted to manage <br /> the practice of"pension spiking," in which a Local Government Employer Retirement System (LGERS) member's <br /> compensation substantially increases, resulting in a monthly retirement benefit that is significantly greater than <br /> the member and employer contributions. <br /> LGERS identified ten County employees that may result in a pension spiking liability. Finance asked LGERS to <br /> assume that all ten members would retire by December 31, 2024, for risk assessment purposes. LGERS <br /> completed the analysis in January and confirmed that there is no actual pension spiking liability for the ten <br /> members identified. <br /> The pension liability results was determined by reviewing each members' Average Final Compensation (AFC) <br /> defined as the last four years of service versus the CBBC threshold of$130,764.73 for 2024 and $134,687.67 for <br /> 2025. All 10 members AFC were below the CBBC. The CBBC is adjusted annually for inflation by LGERS. <br /> Finance will request an annual LGERS review prior to the ensuing year budget development to ascertain any <br /> changes in the pension spiking liability and provide the Board and the Manager similar information as herein. <br /> cc: Travis Myren, County Manager <br /> Cait Fenhagen, Interim Deputy Manager <br /> Brenda Bartholomew, Human Resources Director <br /> Kirk Vaughn, Budget Director <br /> 1 <br />