MERS valuation shows Grosse Hill township plan 61% funded; smoothing policy delays swings

Jamie, a presenter from the Municipal Employees’ Retirement System (MERS), told the Grosse Hill Township Board of Trustees on Sept. 8 that the township’s defined-benefit plan was 61% funded as of Dec. 31, 2023 and remained at 61% in the 2024 valuation. “So as of 12/31/23, you were 61% funded,” Jamie said. The valuation sets the township’s required employer contribution two years ahead; for April 1, 2026, the required annual contribution is about $2,100,000, roughly $131,000 more than the 2025 rate, the presenter said.

The nut graf — why this matters: the funded ratio, actuarial assumptions and contribution schedule affect the township’s future budgets and state reporting. The board heard how smoothing of market gains and losses, changes in actuarial tables and the assumed investment return drive year-to-year movement in contributions and the funded level.

Jamie said the plan uses a MERS-wide assumed rate of return of 6.93%, below the uniform state assumption of 7%, and noted MERS’ “dedicated gains” policy that can use positive market years to buy down the assumed rate. “For this year, although we were above the 6.93%, we weren't above it enough to buy down that rate of return by any basis points,” Jamie said. The presentation explained MERS smooths investment gains and losses over five years; that smoothing produced a 3.79% actuarial smoothing return in 2024 while the total market return was 7.28%, because the plan is still recognizing a roughly 10% loss from 2022.

The board was shown multi-year projections. Jamie pointed to a six-year table and a longer forecast that show the funded level rising after the plan fully recognizes earlier market losses: “In the year ending 2027 … you can see that your funded level starts to go up … That is the year that the loss from 2022 … is fully recognized.” Under the township’s current amortization (a fixed 15-year schedule that declines one year per year from earlier changes), the actuaries project the unfunded liability to be paid down over time and the required contribution to fall once the plan reaches full funding.

Board members asked about assumptions that most affect costs. Jamie singled out the investment return assumption and demographic experience (mortality, retirements, wage growth) and described the experience study process that informs those assumptions roughly every five years. She noted a recent change to the mortality tables to capture possible intergenerational effects from COVID-era mortality differences.

Several trustees pressed for options to reduce volatility and for scenarios the board could use in budgeting. Jamie and MERS staff said they can run “what-if” projections at different assumed returns (for example 4.93% or 5.93%) and produce six-year numeric projections showing how required contributions would change. Jamie said MERS can run in‑house projections if the board gives 30–45 days’ notice and provides example supplemental contribution amounts to test (for example, an extra $200,000 or $500,000 a year).

Board members also asked about state reporting differences; Jamie explained the state’s uniform assumption is 7% and that the MERS valuation footnote notes use of 6.93% where applicable for PA 202 reporting. “If you ever see a report where the data looks different, it’s because the state uses that 7%,” Jamie said.

Ending — what’s next: trustees asked staff to request follow-up analyses if the board considers supplemental contributions or an amortization change. MERS offered to provide historical returns and asset-allocation details from its website and to run board‑requested scenarios before the township’s next budgeting cycle.