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Council approves Firefighters' fund soundness restoration plan after presentation on unfunded liability
Summary
Sweetwater council approved a funding soundness restoration plan (FSRP) for the Sweetwater Firemen's Relief and Retirement Fund after the pension board presented options to reduce a projected 39-year amortization to under the Pension Review Board's 30-year limit.
The Sweetwater City Council voted to approve a funding soundness restoration plan (FSRP) presented by the Sweetwater Firemen's Relief and Retirement Fund that, if implemented as proposed, would reduce the plan's unfunded actuarial liability amortization period to under the Pension Review Board's (PRB) 30-year limit.
Chris Taylor, chairman of the pension board, told the council the fund's unfunded actuarial liability (UAL) was $8,380,000 based on the most recent actuarial valuation. Taylor said the current amortization period is 39 years, above the PRB's 30-year compliance target (the PRB recently changed the standard from 40 years to 30 years). The pension board's actuarial firm presented several options. "Extending [the final earnings averaging period] from three years to six years would reduce the amortization to 34 years," Taylor said. He said removing overtime from pensionable earnings for contribution and benefit calculations, combined with the averaging change, would reduce the amortization period to an estimated 29 years, meeting PRB goals.
Taylor said the plan would not require new immediate city contribution changes; the city already agreed in a prior FSRP to increase its contribution to 24% over a two-year period. He said the board also reviewed additional options (including changing retirement eligibility) but had not recommended those at this time. The board will present future actuarial evaluations to the PRB and revisit adjustments as required.
Council moved, seconded and approved the plan on a voice vote. No roll-call tally with named votes was recorded in the audio transcript.
During the discussion council members asked procedural questions about the PRB and whether the plan included monetary changes for the city; Taylor confirmed the city met contribution changes required by the prior FSRP and that the current options focus on actuarial definition changes and benefit-payroll calculations. Taylor also said the board is reviewing investment strategies and working with investment advisers (Westwood and the actuarial consultant) to improve long-term funding outcomes.
The pension board presentation materials were referenced in the meeting packet and the board indicated projections showing the plan reaching full funding by 2053 under the recommended mix of changes and assumptions.
