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Riverside finance committee hears update on CalPERS liabilities, pension obligation bond performance
Summary
City staff and financial advisers told the Finance Committee the 2019–2020 pension obligation bond has reduced near-term volatility in CalPERS payments, while the city builds a Section 115 trust to smooth an expected payment spike later this decade.
The City of Riverside Finance Committee received an update May 14 on the city’s unfunded accrued liability with the California Public Employees’ Retirement System (CalPERS), the performance of a pension obligation bond (POB) issued in 2020 and plans to use a Section 115 trust to smooth future pension payment spikes.
Financial adviser Mike Meyer of NHA said the city issued roughly $432,000,000 of pension obligation bonds in 2020, locking in a 3.69% interest rate and using the proceeds to convert a portion of the CalPERS unfunded accrued liability (UAL) to fixed-rate debt. “In the last five years, about $45,000,000 of savings,” Meyer said, describing realized savings from the difference between CalPERS returns and the bond rate.
The update also described how CalPERS investment returns since issuance have affected the remaining UAL and the city’s planning. Edward Enriquez, the city’s chief financial officer, told the committee the city originally faced a UAL that had grown as…
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