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SFERS director: market returns and contribution rates likely to climb through 2014
Summary
The San Francisco retirement system reported improved market values since the 2008 downturn but said actuarial liabilities remain large. Director Jay Hueish said the employer contribution rate is set at 20.71% starting July 1 and could rise to about 24% under some scenarios, though employee cost-sharing under Prop C will offset part of the city burden.
Jay Hueish, executive director of the San Francisco Employees' Retirement System, told the Budget & Finance Committee that the fund has recovered substantially from the market losses of 2008'09 and that market-value funded levels are about 83.9 percent. He described a complex picture in which actuarial smoothing, new benefit tiers and investment returns all interact.
Hueish said the retirement board has set an employer contribution rate of 20.71 percent starting July 1, but that actuaries have modeled scenarios in which the gross contribution rate could reach around 24 percent over the next two years. He noted, however, that Proposition C's cost-sharing provisions and higher employee contributions would reduce the city's net share and that final numbers depend on market performance through the fiscal year closing on June 30.
The retirement director also described internal improvements and member activity: plan consolidation since 2010 has resulted in multiple plan tiers, SFERS membership numbers (about 33,475 active members and 24,292 retired members), voluntary deferred-comp participation and active work on customer service, web enhancements and risk reporting. The Retirement System staff signaled agreement with budget analyst recommendations on their operating asks and requested no general-fund support for deferred-comp administration.
"We will invest as best we can to bring up the market value of assets," Hueish said, adding the system aims to approach 100 percent funding but will rely heavily on returns and phased adjustments.
