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Payson council hears detailed PSPRS briefing as town seeks to reduce pension shortfall
Summary
A Public Safety Personnel Retirement System consultant explained how Payson's police and fire pension liabilities are calculated, why the town's funded ratio rose modestly, and how extra contributions and local sales-tax revenue relate to the long-term plan to close the unfunded liability.
Clark Partridge, an executive consultant with the Public Safety Personnel Retirement System (PSPRS), walked Payson Common Council members through the actuarial valuation and how the system's unfunded actuarial accrued liability is calculated.
"The money comes from contributions and from investment returns on those assets," Partridge said, summarizing the basic pension funding equation and the role of actuarial assumptions in projecting benefit cash flows.
Partridge explained that actuaries estimate the present value of future benefits, split that amount into the portion already earned (the actuarial accrued liability) and the part to be earned in the future (normal cost), then compare the accrued liability to plan assets. If assets lag liabilities, an unfunded portion is amortized over a set period.
Why it matters: Payson's police plan funded ratio rose from about 50.8% to 54.4% in the most recent valuation, Partridge said. He credited a mix of investment returns that tracked the actuarial assumption (7.2%), an additional…
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