What’s New in the World of LOSAP?

By Diane Setter

The Fire District LOSAP’s haven’t changed much since the law was first established in 1989. However, in August 2021, New York State signed into law a change that increased the maximum years of service credits from 40 to 50 years. Currently, any Fire Districts that started in their plans in 1989 and allowed for a five-year buy back, are now reaching their 40 year maximum. According to Robert Sagistano from Hometown Firefighter Services, many of their accounts have been requesting information on the increase. Joe Frank, from Sapienza and Frank, advises that a new mandatory referendum is required for a Fire District to make this change. This is due to the fact that this change will alter the original referendum that was voted on by the public to establish the LOSAPplan.

In other news, LOSAPinvesting is now a “hot topic” due to the changes happening in the world of finance. According to Linda Koszalka Managing Director Investments of Wells Fargo Advisors, her and her team would recommend that the individual Fire Districts determine their risk tolerance. That can be done by evaluating the district’s need for the funds and the time horizon (as determined by your actuary).

“If the funds are short term and cannot lose value, we ask our clients to consider CDs, money market instruments or treasuries,” Koszalka said. “If the funds are meant for five years or longer, we would look at a mixture of bonds, stocks, mutual funds, ETFs and money markets.”

Robert Sagistano from Hometown had similar advice and recommends fixed rate annuities and conservative equities. He stated that annuity rates have climbed and insurance products are in the 4.5 to 5.15 percent range. He further advises that if a program is under 50 percent funded that they lean more towards conservative programs.

When asked if bond laddering is something Ms. Koszalka would suggest if a board is interested in the Bond Market, she said, “We would recommend laddering bonds or a barbell approach. Currently, the interest rates are higher on the short end than on the long end of the yield curve. Abarbell would invest monies in the short end and the long end of the yield curve.” She reminds us to keep in mind that Bond Laddering does not assure a profit or pro- tect against loss in a declining market.

Fiduciaries of LOSAP plans should keep in mind

“The Prudent Man Rule.” Simply put, the Prudent Man Rule requires that each investment be judged on its own merits and that speculative or risky investments must be avoided. A fiduciary shall discharge his or her duties with the care, skill, prudence and diligence as a prudent person acting for the benefit of all.

Officials should contact their LOSAP provider and/or attorney to request information on where your particular program stands. Also, keep in mind that LOSAPproviders suggest a full review of Fire District plans at least every three to five years, if not annually. This will keep your plans current and make sure that nothing falls through the cracks.