Pension trustees approve change to aggregate actuarial method and keep outside counsel for disability IMEs

The City of Clearwater pension trustees on April 14 approved two procedural changes intended to align actuarial funding with the plan's current funded status and to streamline handling of disability pension applications.

Jay Ravens, finance director, introduced an annual review of the pension plan's investment performance for the calendar and plan year ended Dec. 31, 2024, reporting a total-plan gain of approximately 10.27% for 2024 and noting the plan outperformed its benchmark. After trustees accepted the investment report, Ravens introduced Pete Strong of Gabriel, Roeder, Smith & Company, who recommended changing the actuarial funding method.

Pete Strong said the plan's long-standing entry-age normal method separates normal cost from an unfunded liability payment; because the plan is currently above 100% funded, the entry-age normal approach requires payment of the full normal cost without a negative-amortization credit for surplus. Under the aggregate funding method no separate unfunded liability payment exists and the overall normal cost takes the surplus into account, which can reduce near-term employer contribution requirements. Strong also presented stress-test projections showing that aggregate contributions would be lower while the plan would approach—but in some stress scenarios might not immediately return to 100% funded as quickly as under entry-age normal; trustees discussed both the contribution savings and the longer runway to return to 100% in downside scenarios.

After discussion, the trustees moved and seconded a motion to change the funding method for the actuarial valuation dated Jan. 1, 2025, from entry-age normal to aggregate; the trustees voted to approve the recommendation.

Trustees also discussed recent operational changes to disability-pension procedures. Staff noted that, as negotiated in recent collective-bargaining agreements and codified in City ordinance 98-13-25, the administrative process for new disability applications has changed but the underlying legal standards and benefits remain the same. Historically the Pension Advisory Committee (PAC) had processed disability applications; staff said that growing application volume and increasingly complex medical issues made the PAC process difficult to manage.

Staff recommended preserving the practice of using the pension fund's outside counsel to arrange independent medical examinations (IMEs) for applicants rather than having trustees select medical examiners case by case. Trustees said maintaining the independent, third-party process protected both applicants and the fund from perceived conflicts and would avoid scheduling and expertise issues. The board voted to designate the pension fund legal counsel to select and arrange physician IMEs under the new ordinance.

Ending

Trustees asked staff to circulate the actuarial projection slides and to provide follow-up cost-projection tables showing multi-year contribution scenarios under both funding methods. Staff said they would return with additional materials and that existing applications filed under the prior process would be handled under the previously applicable rules.