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Police officers pension board lowers investment return assumption to 7.3%
Summary
The Police Officers Pension Board voted to lower its assumed investment return from 7.4% to 7.3% effective with the 10/01/2024 valuation. The change follows a consultant'led study and board discussion about the fiscal impact, which Doug estimated at roughly $25,000 initially.
The Police Officers Pension Board on Dec. 9 voted to lower its long-term investment return assumption to 7.3% effective with the 10/01/2024 valuation.
Doug, the consultant who presented the board's investment assumption study, told trustees an immediate drop to 7.0% would push the city to provide substantially higher contributions, but a modest step to 7.3% would smooth the transition. "If you told me today ... to 7, you would be asking the city for an extra about 4.5% of payroll," Doug said, adding that moving to 7.3% initially and revisiting the assumption annually is a common approach.
Pedro read draft motion language to implement the change and the board approved the motion. "The investment return assumption shall be lowered to 7.3% effective with the 10/01/2024 valuation," Pedro recited during the meeting.
Board members asked about the financial impact. Doug estimated the change would amount to roughly $100 per year in employer cost on an average payroll basis and about $25,000 in aggregate initially, a figure he said would evolve as valuations and payrolls change. The board recorded the motion, held a roll call vote and approved the change.
The board instructed staff and the actuary to reflect the revised assumption in upcoming valuation materials and to revisit the assumption with the next annual report.
