HomeMy WebLinkAboutFS 2013-09-04 Item 2B - Discussion - PERS / LEOFF Rates and TrendsTO:
City of Tukwila
Jim Haggerton, Mayor
INFORMATIONAL MEMORANDUM
Mayor Haggerton
Finance and Safety Committee
FROM: Peggy McCarthy, Finance Director
BY: Craig Zellerhoff, Fiscal Coordinator Payroll and Accounts Payable
DATE: August 28, 2013
SUBJECT: PERS AND LEOFF Pension Funding Status
ISSUE
To provide information relating to City contribution rates for pension plans through the
Department of Retirement Services (DRS).
BACKGROUND
City Council has requested pension information for the Public Employees Retirement Systems
(PERS) and Law Enforcement Officers and Fire Fighters (LEOFF).
DISCUSSION
The City of Tukwila provides pension benefits to qualified employees through plans established
by DRS, which is managed by the State of Washington. The intent of the public pension funding
in Washington State is to provide a dependable and systematic process for financing the
benefits provided by the retirement systems. The six goals of the process are contained in RCW
41.45.010.
1. Continue to fully fund all retirement Plans 2 and 3 as provided by law.
2. Fully amortize the total costs of LEOFF 1 unfunded liabilities no later than June 30,
2024.
3. Fully amortize the total costs of PERS 1 and TRS 1 unfunded liabilities within a
rolling ten -year period.
4. Establish long -term employer contribution rates, which will remain a relatively
predictable proportion of the future state budgets.
5. Fund benefit increases for PERS 1 and TRS 1 over a fixed ten -year period.
6. Fund, to the extent feasible, all benefits for Plan 2 and 3 members over the working
lives of those members, so that the cost of those benefits are paid by the taxpayers
who receive the benefit of those members' service.
An actuarial study is performed annually to recommend contributions rates by employers to
ensure the funding status of each of the plans are adequate. Nationally the State of Washington
DRS pension plans are among the top four pension plans in funding status as of June 2012.
Below is the preliminary funding status by pension program as of June 30, 2012.
17
18
Preliminary Funded Status For Washington At June 30, 2012
14&%
120%
1 OL1%
8Cl t.
60.
40
20%
D
II%
74%
1349
135%
119%
114%
PERS 1 PERS 213 TRS 1 FRS V 3 SEM 2n MRS 2 L €OE1 '1 LEOFF 2 WPM
0:f ??PresrntatiansF?013 Senia-1_aby7- 15- 13.ppbc
http: / /osa. leg .wa.gov /Actuarial_Services /Publications /Presentations.htm
Employer contributions rates are recommended by the Office of the State Actuary and approved
by the Legislature. Current and forecasted rates are as follows:
Program
Adopted
7/1/13- 6/30/15
Expected
7/1/15- 6/30/17
PERS
9.03%
10.41%
PSERS
10.36%
10.68%
LEOFF
8.41%
8.41%
Rates do not include .16 DRS administrative fee
Source: http: / /osa.leg.wa.gov /Actuarial_ Services /Funding /contribution_rates.htm
19
Projected Employer Contribution Rates - PERS
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030 2034 2038 2042
tissumes rao future benefit improvements and full funding up to assumed system maximurrrs-
• xt. 46. St..ems
OAITCk2012Trehminaey_Re-mhs -Ac _darial_Valwatian.pphe
28
http: / /osa. leg .wa.gov /Actuarial_Services /Publications /Presentations. htm
Projected Employer Contribution Rates - P'SER '
2°
0°
2011
2006 2010 2014 2018 2022 2026 2030 2034 2038 2042
'Assumes no future benefit improvements and fuJJ funding rip to assumed system maximums.
0:'..,11F €92012'! aref minazy_R cults -'A cdsariaLValaatican.ppbe 31
http: // osa. leg .wa.gov /Actuarial_Services /Publications /Presentations. htm
21
For the PERS and PSERS programs the employer contribution rates are expected to remain
relatively flat through 2027 before decreasing by about 2 %.
RECOMMENDATION
Information Only
23