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Montgomery County retirement board hears strong 2024 returns; actuarial valuation will determine COLA timing
Summary
Board members approved December minutes and heard that Montgomery County contributed 100% of its required pension contribution in 2024 ($26.3 million). Investment presenter Kathy reported a year-end market value near $652.9 million and an 11.7% calendar-year return; an actuarial valuation due June/July will determine whether the plan exceeds the 80% funding threshold needed to trigger COLA action.
The Montgomery County Employees Retirement Board approved its December minutes and received reports on plan funding and 2024 investment performance.
CFO Remarks and County Contribution
The county made a full required contribution for calendar year 2024, Speaker 4 reported: “We ended up making a 100% of our pension plan contribution. That was 26,300,000.0.” The board’s budget for 2025 anticipates a county contribution of about $30,100,000, planned as roughly $500,000 per quarter.
Why the valuation matters
Board members pressed staff about the timing and effect of the actuarial valuation. Speaker 4 said the actuarial valuation as of Jan. 1, 2025, is being updated and that the plan’s funding percentage must exceed 80% to enable some COLA (cost-of-living adjustment) conversations: “That will be as of 01/01/2025 evaluation.” He noted the formal COLA calculation typically arrives in September and any action to approve a 2026 COLA would have to be taken before the end of 2025.
Investment performance summary
Kathy, the investment presenter, provided an executive summary of portfolio performance. She said the consolidated plan began the year near $597,000,000, rose to about $663,000,000 in the third quarter and closed 2024 at $652,900,000. Kathy reported a calendar-year return of 11.7% for 2024 and described recent volatility in January, noting an intraday move from about $667,300,000 to $666,000,000. “You started the year at $597,000,000 … and we ended the year 652,900,000.0,” she said.
Kathy attributed 2024 gains mainly to U.S. large-cap equity exposure and said alternatives added value: the structured credit fund was up about 22% and special-situations funds were up about 17% in 2024. She also said the plan’s blended benchmark returned about 9.6% for the year, indicating roughly 200 basis points of active outperformance.
Manager changes and allocation
Kathy said SEI (the adviser noted in the presentation) acts as a co-fiduciary and that staff and advisers will revisit strategic asset allocation and certain manager decisions this year. She described switching a sub-adviser to a new firm to preserve manager continuity and emphasized that the plan’s long-term allocation, rather than short-term market movements, drives decision-making.
Next steps
No formal COLA decision was made at the meeting. Staff said they expect the actuarial valuation results to be available around June, with a formal presentation to the board in July; they will request an early, preliminary estimate from the actuary so the board can plan for possible COLA deliberations. The board’s minutes for December were approved by voice vote earlier in the meeting.
The board did not take additional formal action on benefits or COLA at this session; the valuation and subsequent staff and actuary presentations will determine next procedural steps.
