San Joaquin County pension plan reports $7.3M contributions despite market losses

In the heart of San Joaquin County, the Deferred Compensation Advisory Committee convened on February 27, 2025, to review the financial health of the county's retirement plans. As the meeting unfolded, committee members examined a balance sheet that revealed a significant shift in market activity, marking the first negative quarter in some time. The plans began the quarter with $68 million in assets but ended with $65 million, reflecting a challenging financial landscape.

During the meeting, it was noted that the county received $7.3 million in contributions for the quarter, a solid figure despite the overall decline in assets. The committee highlighted that distributions typically rise in the fourth quarter due to required minimum distributions (RMDs), which accounted for a notable $2.2 million this quarter, compared to just $386,000 in the previous quarter. This surge in withdrawals underscored the importance of monitoring participant behavior, especially as many employees separate from service and take their funds elsewhere.

The discussion also touched on the participation rates within the plans, revealing that out of 7,428 participants, a little over half of the assets were held by current employees. This statistic raised concerns about rollover activity, as participants who leave the county can take their funds with them. The committee emphasized the need for strategies to retain these assets, particularly as the aging workforce may lead to increased retirements.

In a deeper dive into investment choices, the committee noted that 52% of new contributions were directed into target date funds, while a significant portion of existing assets—36%—was allocated to large-cap mutual funds. The meeting also highlighted the growing trend of self-directed brokerage accounts, where participants have the option to manage their investments more actively.

As the meeting drew to a close, members reflected on the importance of understanding the county's financial position in comparison to other counties. It was noted that San Joaquin County had a higher ratio of terminated assets than many peers, but this was not seen as alarming. Instead, it was viewed as a potential indicator of the plan's attractiveness, suggesting that participants were inclined to stay invested.

The meeting concluded with a commitment to continue monitoring these trends and to develop strategies that would enhance the plan's appeal and stability in the face of changing market conditions. As the committee looks ahead, the focus remains on ensuring that the retirement plans serve the best interests of all participants, fostering a secure financial future for San Joaquin County employees.