Punta Gorda pension trustees adopt new actuarial assumptions, set investment return at 7.25%

PUNTA GORDA, Fla. — The Punta Gorda Firefighters’ Pension Board voted unanimously to adopt a package of changes to its actuarial assumptions, including a new assumed investment return of 7.25%, the board’s actuary said at the meeting.

The changes came after an experience study and included adjustments to how normal costs are calculated, updates to mortality assumptions based on state guidance, a small increase to turnover assumptions and revised salary-increase assumptions. The board’s actuarial consultant said the package would raise the city’s annual funding requirement beginning when the changes take effect in the 2026 funding year by an estimated $75,000 to $80,000.

The actuarial consultant, Patrick (Actuary, actuarial firm), explained the purpose of the experience study and walked trustees through each proposed change. “Every five years you’re supposed to look at all of your actual experience… and say OK, what if we want to change those assumptions,” Patrick said. He described a proposed tweak to the timing of normal-cost recognition that would slightly reduce annual normal cost but increase the accrued liability shown on the valuation.

Patrick said the state has required plans to revise mortality assumptions for the 10/01/2025 valuation report, and that the change will increase funding requirements because male retirees’ expected lifespans increased under the new tables. On salary increases, Patrick recommended moving to a service-based model: higher assumed increases in years 1–9 and smaller increases afterward, producing an average projected salary-growth assumption of roughly 6.8 percent versus the current 6 percent.

Regarding turnover and other demographics, the consultant proposed modest adjustments: raising the short-service turnover assumption to 4 percent (from 3.6 percent) based on 10-year experience, and leaving disability and retirement-rate assumptions largely unchanged because experience tracked current assumptions. Patrick said the turnover change would reduce plan cost by roughly $8,000 a year, while other changes increase cost.

On investment return, Patrick said the current assumption of 7.35 percent was reasonable but that lowering it would reduce the city’s required contribution. “If we go to 7.25… the city’s costs are gonna go up about $150,000 a year if we do all the changes Patrick recommended and leave [return] at 7.35,” Patrick said, explaining the tradeoffs. He also offered a glide path option: reduce the return assumption by 5–10 basis points per year until reaching a target over several years.

Trustees moved to accept all recommended assumption changes and set the discount-rate assumption to 7.25 percent; the motion was seconded and carried unanimously. The board and actuary clarified that any approved assumption changes will be reflected in the 10/01/2025 actuarial valuation and will affect the city’s funding requirement beginning October 1, 2026.

The board asked that the consultant show the current and new assumptions and their impact in the next valuation report; Patrick said he will include a side-by-side comparison in the October/December valuation report.

The board did not change participation rules, benefits, or contribution policy during the vote; those would require separate action.

The trustees will review the full valuation results when Patrick presents the 10/01/2025 valuation later in the year.