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Police Pension Board approves 7.3% return assumption, authorizes experience study
Summary
The Police Officers' Pension Board accepted the Oct. 1, 2024 actuarial valuation, adopted a 7.3% net-of-fees long-term investment assumption and approved an actuarial experience study; trustees were told funded status slipped slightly to 80.9% largely because the board lowered the assumed return.
The Police Officers’ Pension Board on June 9 approved its actuarial valuation for the plan year ending Oct. 1, 2024, adopted a new long-term investment assumption of 7.3% and authorized an experience study to update mortality and other assumptions.
The valuation presented by the plan actuary showed the plan’s funded ratio decreased slightly to 80.9% from 81.4% the prior year, a slide the actuary attributed primarily to the board’s decision to lower the investment-return assumption from 7.4% to 7.3%. "Your funded status went down ever so slightly," the actuary said, adding that lowering the assumption was the main driver of the change.
Why it matters: the funded ratio and the actuarial assumptions feed directly into employer contribution levels and the board’s long-term funding plan. The actuary told trustees that, although the plan booked a small actuarial loss for the year, market performance was strong (a reported roughly 23% market return for the year) and that payroll growth and more plan members modestly increased dollar costs.
Key facts and motions - The board voted to approve the valuation report and accepted the declaration of returns using a 7.3% net-of-fees investment return assumption for the coming reporting period. The declaration was moved, seconded and passed by roll-call vote. - The board approved an experience study to update mortality and other demographic assumptions; the actuary will present that study at a future meeting.
What trustees were told The actuary highlighted several drivers of plan costs: an average salary increase in recent contracts of about 12%, the addition of plan members (31 members previously, 33 reported at present), and a modest actuarial loss that was not large enough to materially change the plan’s overall funded status. The actuary recommended using the 7.3% assumption in the near term and completing an experience study to refresh demographic and mortality assumptions (the last experience study was completed in September 2020).
Board next steps The board authorized the experience study and is scheduled to receive the actuarial findings and cost projections at upcoming meetings; trustees also discussed running longer-term cost projections after the new assumptions are in place.
The meeting record shows the motions passed by roll call; no dissenting votes were recorded in the transcript. The chair said trustees will be updated at the next meeting about any follow-up items tied to the valuation and assumptions.
