Actuary reports plan performance, smoothing and a multiplier increase; retiree payout change set for Oct. 1, 2025

The board's actuarial consultant presented the annual valuation, reporting a strong investment year but noting the plan continues to use a multi-year smoothing method that spreads gains over five years. The consultant said the plan’s multiplier — the factor that determines benefit accrual — rose to 3.22 from 3.15 and that the change increased the plan’s cost in the short term.

The consultant explained that while the plan earned about $2,015,000 on investments against an expected $673,000 (based on a 7.4% assumption), the plan spreads recognized gains over five years; only a portion of this year’s gain is recognized immediately for funding purposes. The unfunded actuarial accrued liability moved during the valuation and the plan is making annual amortization payments to reduce it.

On benefit timing, trustees asked when retirees would see the multiplier increase reflected in payments. The consultant said the effective date for the increased benefit payment is Oct. 1, 2025, and that staff would check city payroll records to ensure prior adjustments were applied correctly.

Board action: Trustees voted to accept the actuarial report as presented. The consultant provided several modeling options (including fixing the multiplier permanently at various levels) and explained the trade-offs between locking a higher multiplier now versus allowing it to fluctuate with future valuations.

Why it matters: The multiplier and smoothing choices directly affect future benefit accruals, city contribution rates and plan funding. The board discussed next steps, including whether to propose a fixed multiplier by ordinance in negotiations with the city.