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Pension trustees accept 10/1/2021 actuarial valuation; city contribution and return assumptions set
Summary
Trustees for Jacksonville Beach's three pension systems accepted the actuarial valuation dated Oct. 1, 2021, and approved long-term investment return assumptions and related contribution invoices that will affect the city budget.
Trustees for the Jacksonville Beach General Employees, Police Officers and Firefighters pension systems voted to accept the actuarial valuation prepared as of Oct. 1, 2021, and to proceed with the contribution invoices and assumptions described in the report.
The actuarial presentation, given to the combined boards during the meeting, used a 10/01/2021 valuation date and showed improved funded ratios compared with the prior valuation. The general system's funded ratio rose into the low-to-mid 80s, the Police Officers system moved from the mid-90s toward the high-90s, and the Firefighters plan showed funding at or above 100% on the city’s accounting view as of that valuation date. The actuary said the valuation used a four-year smoothing method for asset recognition designed to moderate contribution volatility.
Why it matters: acceptance of the valuation establishes the actuarially determined contribution amounts the city will be invoiced for and fixes the baseline assumptions that plan sponsors and the city will use for near-term budgeting. The actuary warned boards that the 2022 market experience will be recognized gradually and could change the contribution picture when the next valuation is produced.
Most important facts first: the boards accepted the valuation and the invoice figures the actuary recommended. The actuary presented city contribution numbers for budgeting purposes: approximately $2.3 million for the general employees plan, about $433,000 for the police plan and about $984,000 for the firefighters plan as the next required contributions based on the valuation and recognition rules presented to the boards. The presentation noted that the city retained a contribution reserve that reduced the immediate invoice for the firefighters plan in this cycle.
Board action and rates: trustees also voted to set the assumed investment return at 7.5 percent for the general employees plan going forward. The firefighters plan’s long-term assumption was confirmed at 6.625 percent consistent with an interlocal arrangement that ties the fire assumption to the City of Jacksonville Police and Fire Pension Fund assumption. The actuary explained that lowering the discount rate increases reported liabilities and that small changes in the assumed return materially affect the net pension liability.
Discussion and context: the actuary explained the valuation mechanics, including present-value calculations for future benefits, the amortization schedule used for unfunded liabilities and the four-year smoothing of market returns. He emphasized that the plans entered the 2022 valuation cycle with unrecognized investment gains from 2021 that will offset some near-term contribution pressure, but that future negative experience could increase employer costs as those years are recognized.
What the boards decided: each of the three boards made motions and voted to accept the actuarial valuation report as presented and to accept the invoiced contribution figures based on the valuation. The votes were recorded by roll-call for each board.
Looking ahead: the actuary and trustees noted that the 10/01/2022 valuation will reflect more recent market experience and will be reflected in the 2023–24 budget cycle; trustees will revisit assumptions and contribution impacts with that future valuation.
