Board directs ad hoc committee to draft COLA and interest-crediting policy
Summary
Following an ad hoc committee review, the board directed the committee to work with the actuarial firm to craft revisions to the interest-crediting policy (to prioritize paying down unfunded actuarial liability) and to develop member education and a statutory COLA policy for future board review.
Legal counsel summarized the ad hoc committee's two principal recommendations: amend the interest-crediting policy so surplus earnings would primarily be used to reduce the unfunded actuarial liability, and develop education and a formal policy governing statutory COLA and the COLA bank.
"My recommendation would be for the board to direct the ad hoc committee to work with the actuary to develop a policy along the lines of what we discussed," said Chris, the board's legal counsel. Board members debated whether ad hoc COLAs are plan-design matters for employers and bargaining units or within the retirement board's purview, but ultimately moved and approved direction to the ad hoc committee to produce draft policy language and return with recommendations.
The board requested actuarial involvement to clarify bookkeeping questions around the contra (contract) tracking account and to present policy options (including whether to retain, rename or eliminate the tracking account) for future consideration.
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