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Tacoma retirement board briefs committee as funded ratio hovers near 95%
Summary
Catherine Marks of the Tacoma Employees Retirement System told the joint committee that TERS remains in a "no action" funding zone (actuarial value ~95.5% for 2025) but is showing a gradual decline; the board is not recommending contribution increases now but flagged long-term risks and the potential cost of even small contribution changes.
Catherine Marks, a presenter from the Tacoma Employees Retirement System (TERS), told the joint Government Performance & Finance Committee and Audit Advisory Board on April 21 that TERS is a defined-benefit pension covering roughly 3,400 active employees plus retirees and public-member agencies and that investment income supplies about 70% of plan funding.
Marks explained the funded-ratio framework that guides TERS policy and said the most recent completed valuation (actuarial basis) put the system at about 95.5% for 2025, while the 2025 market-value snapshot was roughly 93.9% and the 2026 valuation is an estimate currently tracking near 96.6%. "This is for purely for informational education purposes," Marks said, noting the board was not seeking any immediate council action.
Why it matters: the board uses a three-zone approach (green: above 120%; yellow: 95% to 120%; red: below 95%) to guide responses. Marks said the system is currently in the yellow "no action" zone but that values have trended down slightly since 2023 and the board is discussing options to avoid surprising the council if corrective measures become necessary.
Marks described TERS fiduciary practice and investment oversight. "All the money so right now, our our, we call it net decision is 2,500,000,000," she said, adding the plan contracts with multiple managers and uses a chief investment officer and consultants to diversify risk. She said the board presently engages about 21 contracted investment managers, monitors performance quarterly and considers manager changes after multi-year evaluation.
On contributions and cost: Marks walked the committee through historical contribution shares and recent changes. Employer contributions are roughly 11.34% and employee contributions around 9.6% (the presentation summarized a longstanding employer/employee split and historical variation since the 1980s). As an illustrative example, Marks said a hypothetical 1% increase in contribution rates would add roughly $2.324 million in employer costs overall and about $1 million to the city's general fund; she reiterated that was an illustration, not a current request.
Committee members pressed for more detail. A committee member asked whether the fund is fully invested and how much is placed in equities versus other assets; Marks responded that assets are diversified across stocks, bonds and private equity and that the board accepts some risk in order to meet long-term return assumptions. On the assumed rate of return, Marks said the expected return has come down over time and is now in the mid-to-high 6% range, a reduction from higher targets used in earlier decades.
Next steps: Marks said the actuary is finalizing the 2026 valuation and that the board will continue to monitor funded levels. She emphasized the presentation was intended to inform council members about long-term sustainability and potential policy choices, including contribution adjustments or plan design changes if the funding trend continued downward.
