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Olivette pension fund posts 11.82% return; funded status shows modest improvement
Summary
Econ Benefits reported the pension plan returned 11.82% for the 2023 plan year, improving several funded-status measures and reducing the unfunded liability. The board discussed contribution alternatives and projection assumptions that differ from GASB-required rates.
AJ Stoll of Econ Benefits told the Olivette City pension board the fund returned 11.82% for the plan year ending Dec. 31, 2023, well above the actuarial expected rate of 7% and a performance that will help improve the plan’s funding trajectory.
Stoll said contributions for the year totaled $610,000 and exceed the value of benefits earned for that period, which further improved the plan’s position. He walked the board through three common ways the plan’s funded status is presented: a present-value-of-accrued-benefits (PVAB) measure, an actuarial projected funding measure, and a GASB-specific measure that uses a lower discount rate because a GASB projection indicates the fund’s balance could go negative by 2055.
On the PVAB basis, Stoll said funded status improved from about 77% to about 79% year over year; other actuarial presentations in the report show figures near 68.4% under one projection and about 75% when using a 7% economic assumption combined with actuarial projection methods. The report’s reconciliation showed the plan’s unfunded liability near $10.1–$10.17 million at year end, down from figures cited near $10.6 million earlier in the document.
Stoll described recommended contribution alternatives tied to amortization length: using a 20-year amortization the normal cost was shown at roughly $504,000 and the amortization component about $897,000, producing a gross recommended contribution near $1.5 million and a net recommended tax revenue contribution of about $1.2 million after employee contributions. He also presented 30-year and 10-year sensitivities (roughly $1.1 million and about $1.758 million, respectively), and a forward-looking scenario that, at the recommended contribution level, projects a roughly 1.1 percentage-point funded-status improvement over one year.
Board members asked clarifying questions about the report’s numbers, the GASB discount-rate limitation and how optional forms (for example, taking employee contributions as a lump sum) are valued. Stoll said the valuation assumes a life annuity for participants and that optional forms are actuarially equivalent for valuation purposes; for statutory or beneficiary hierarchy questions he said he would confirm specific plan-document language.
The report included market-value and manager reviews, historical context showing the sharp 2022 downturn (about -13%) and the partial recovery in 2023, and a forward-looking section that cited a roughly $7.2 million shortfall that would continue to grow at the assumed interest rate unless contributions or returns change the trajectory.
The board did not vote on funding policy at the meeting; the discussion provided the analytical basis for future contribution and policy choices.
Next steps: staff and the plan’s advisers will provide final amendment language for the administrative change voted on separately and continue monitoring asset performance and contribution policy options.
