Public-safety pension board reports 101.9% funded but flags underperforming real-estate allocation

A volunteer member of the Village of Tequesta public-safety pension board updated the council on the plan’s performance, saying the fund is well funded overall but that a real-estate allocation has been a persistent problem.

Christopher, a pension-board volunteer, told the council the plan’s actuarial valuation showed just over $26 million in assets and about 41 active members (the presentation combined membership and contributions data). He said the plan was about 101.9% funded as of Sept. 30 of the prior year.

The board member emphasized the trouble stemmed from the plan’s real-estate manager, which has produced consistently poor returns and limited liquidity. The board has requested full redemption of that real-estate position but has received only a small cash return so far; Christopher said the board has asked the manager to process redemptions and that cash returned has been minimal.

To limit future contribution volatility, the pension board reported reducing the assumed rate of return gradually (in the order of 5–10 basis points at a time) and discussed lowering the policy allocation to 0% for the problematic real-estate fund to avoid being forced to add money into a persistently underperforming asset.

Council members thanked the volunteer board and asked follow-up questions about timing for asset redemption and the potential impact of new mortality tables that will increase liabilities. Christopher said the timing for redemption is uncertain — “probably not 10. Hopefully not 5. 1 would be great, but it's been a year and a half now” — and that updated mortality tables could increase village contributions.