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Administrator: 14 members apply to purchase credited service; state suggests lower actuarial rate
Summary
Pension administrator Dustin reported 14 employees applied to purchase credited service under the recently adopted ordinance, with costs ranging widely; he also relayed a state recommendation to lower the plan—s assumed rate of return and scheduled ethics training for August.
Dustin, the pension administrator, told trustees the city council—s ordinance permitting employees to buy up to three years of credited service is now in operation and that 14 members have submitted applications. "We have two members that have completed their purchase their lumpsum payment and then another five members that have elected an option of some form of either two, three, four or five-year payment plans," he said, adding that the board will see invoices for actuary calculations tied to those purchases.
Dustin said the cost to individuals varies substantially depending on age, salary and how the additional service affects retirement timing: "I've seen from someone purchasing two years that's early on in their career and it was I think 11,000 up to someone who was right near the end of their career and a relatively high earner would be 116,000." He said the board currently needs clarity on whether applicants who file during the initial six-month application period must decide on payment elections within a fixed window or may delay their payment election.
Dustin also reported a letter from the Department of Management Services that accepted actuarial evaluations and recommended the board consider lowering its current 7.5% assumed rate of return into a 5.6—to 6.2% range. "They recommended somewhere between 5.6 to 6.2%," he read; trustees noted the actuary will present and the board may not adopt the state's suggested range without further actuarial analysis, which is expected at the May meeting.
Other administrative updates included plans to bring a budget to the May meeting with increased allowances for additional actuarial calculations, the implementation of new death-audit / proof-of-life software to reduce overpayments, and a short ethics training planned with the city attorney for the August meeting.
The board approved related actuarial invoices during the meeting and requested staff and actuaries provide further cost and timeline clarification for the credited service purchase process.
