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City council appointee briefs council on Chattanooga pension fund’s funding, risks and options
Summary
A council education session reviewed the Chattanooga pension fund’s structure, recent market performance, and funding gap: accrued liabilities were estimated at about $622 million with fund assets in the low-$400 million range, leaving an unfunded liability near $252 million; an actuary’s full valuation is expected in May or June.
Chris, a city council appointee and pension trustee, presented an education briefing to the Chattanooga City Council on the status and management of the city’s police and fire pension fund. He said the fund — founded in 1949 — is governed primarily by sworn trustees (three police, three fire), plus a council appointee and the mayor’s appointee Weston Porter.
Chris explained the difference between a defined-benefit pension and defined-contribution plans, saying pensions guarantee a salary-based retirement benefit and place investment and longevity risk on the fund and employer. He described the fund’s accrued liability as roughly $622 million, based on a 30-year discounted projection using a current assumed rate of return of 6.75%, and said the actuarial value of assets used in preliminary calculations was about $370 million, creating an unfunded liability…
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