City pension fund targets December 1 for supplement payments and improves funded status

On November 7, 2024, the Supplemental Retirement Board convened in Portsmouth, Virginia, to discuss critical financial updates and future strategies for the city's retirement fund. The meeting highlighted the board's efforts to manage the fund's contributions and benefits amid fluctuating market conditions and demographic changes.

A significant focus of the meeting was the planned payment date for supplemental benefits, targeted for December 1, 2024. Board members clarified that these payments would not directly impact the fund's overall balance, as contributions would match the payouts. However, concerns were raised regarding fairness for participants not currently receiving benefits, as only retirees would benefit from the supplemental payments.

The board also reviewed the fund's performance over the past three years, noting strong returns in 2023 and 2024. The market value of the fund has been tracking closely with its actuarial value, indicating that the fund is earning returns as expected, especially following a challenging year in 2022 when the fund experienced a 16% loss. The discussions emphasized the importance of maintaining a stable funded status, which currently stands at approximately 75%. This figure reflects a gradual improvement from previous years, with the unfunded liability decreasing from $73.9 million to $67.5 million.

Board members discussed the implications of these financial metrics, noting that while the percentage of assets to liabilities is important, the actual unfunded liability is a more critical measure that needs addressing through contributions or excess returns. The board's strategy includes a recommended contribution of about $8.1 million for the upcoming fiscal year, slightly lower than the previous year's budget due to strong asset performance.

In addition to financial performance, the board touched on historical investment strategies, particularly the conservative approach taken prior to 2018, which resulted in lower returns. This shift in strategy has allowed for improved performance in recent years, although members acknowledged the need for continued vigilance in managing the fund's assets.

Overall, the meeting underscored the board's commitment to ensuring the long-term sustainability of the retirement fund while addressing the immediate needs of current retirees. As the board moves forward, it will continue to monitor market conditions and demographic trends to make informed decisions that will benefit both current and future participants in the retirement system.