Punta Gorda trustees adopt new actuarial assumptions, keep 7% investment return

Trustees of the Punta Gorda police pension board voted to adopt multiple actuarial assumption changes recommended in a five‑year experience study and to keep the plan—s investment return assumption at 7 percent. The board approved the changes for use in the Oct. 1, 2025 valuation report after a motion and a voice vote at the meeting.

The move switches the plan—s funding method from a frozen entry‑age approach to the entry‑age normal actuarial cost method, aligns several demographic and payroll assumptions with recent experience and state guidance, and keeps the board—s long‑term investment return at 7 percent. The actuary told trustees the combined effect of the recommended assumption changes would raise the city—s annual pension cost by about $158,000 under the sample valuation presented.

Patrick (actuary, Foster & Foster) led the presentation. He described the entry‑age normal method as the standard many other plans now use and said it smooths funding volatility by amortizing gains and losses over a longer, fixed period rather than over the plan—s changing average future working lifetime. "So the total sum total is a $158,000, is how much the city's cost would go up," Patrick said while summarizing the package of recommended changes.

Why it matters: the funding method determines how actuarial gains and losses are amortized. Under the board—s previous approach, a shortfall could be spread over the average remaining service of members (which can be short if the workforce is older), producing larger year‑to‑year swings in annual contributions. The entry‑age normal method the actuary recommended amortizes experience over a standard 15‑year period for new unfunded amounts, a choice the actuary described as delivering steadier city contributions across years.

Key details provided to trustees during the presentation: - Methodology: change from the frozen entry‑age cost method to the entry‑age normal cost method; the actuary noted GASB accounting practice already uses entry‑age normal for reporting and recommended making funding consistent with accounting practice. - Investment assumption: the board retained a 7 percent assumed long‑term rate of return; the actuary noted the Florida Retirement System and some peers use slightly lower rates (for example, 6.7 percent), but presented 7 percent as consistent with the board—s current approach and recent plan returns. - Payroll and salary assumptions: the actuary proposed updated salary growth assumptions based on recent experience, including a higher near‑term salary increase assumption (the actuary proposed moving short‑service assumptions toward 7.25 percent and longer‑service assumptions to about 5.5 percent, reflecting recent promotion, overtime and hiring patterns observed in the plan—s data). - Mortality and disability: the actuary recommended adopting mortality assumptions required by Florida law that reflect improving longevity; he said that change would add roughly $28,000 to annual funding needs in the presented scenario. - Turnover: the recommended turnover table was reworked to be service‑based rather than age‑based to match observed separation patterns; the change was projected to increase cost modestly (about $9,000 in the sample). - Net effect: combining all recommended changes in the actuary—s sample valuation increased the city—s annual cost by about $158,000 versus the prior assumptions. The actuary cautioned the exact dollar amount will differ in the formal Oct. 1, 2025 valuation because of membership and payroll changes between the sample and the official valuation date.

During discussion trustees asked about the mechanics and implications of the change. Trustees raised that a shorter amortization period (for example, if amortized over the average remaining service rather than a fixed 15 years) would push the plan to pay down shortfalls faster but create more contribution volatility. The actuary explained that a 15‑year amortization is common practice among actuaries to stabilize city contributions and avoid sharp year‑to‑year swings tied to investment performance.

The board motion approved "all of the assumption changes in the experience study effective with the 10/01/2025 valuation report, keeping the investment return assumption at 7%." The motion was approved by voice vote; the record shows a voice‑vote approval but no roll‑call tally was taken during the meeting.

Board members and staff were told they may defer final action to a subsequent quarter if they wanted more time; the actuary said he needs a decision before December to finalize the 10/01/2025 valuation report. The board voted at the same meeting to adopt the actuary—s recommendations.

The board also heard supplemental investment performance information from Mariner Institutional during the meeting and discussed related administrative items, but trustees explicitly kept the 7 percent investment assumption in the approved package of assumption changes.

What—s next: the actuary will use the adopted assumptions in the official Oct. 1, 2025 valuation; the city and trustees will see final funding requirements when that valuation is completed, and the actuary noted the city could ask for additional review prior to the December deadline for the valuation report.