City Council
MEETING DATE: 11/9/2016
TITLE:
Title
California Public Employees Retirement System (CalPERS) Annual Lump Sum Payment
End
FROM:
Tami Scott, Administrative Services Director
RECOMMENDATION:
Recommendation
Staff recommends the City Council authorize an allocation of $700,000 to make a lump sum payment to (CalPERS)
Body
BACKGROUND:
In the spring of 2013, the CalPERS board approved a reduction in investment rates of return on deposits of monies paid into CalPERS, from 7.75% to 7.5%, which increased the City’s estimated annual contribution to CalPERS. It is anticipated CalPERS will lower their investment rate of return from 7.5% to 6.5 in the next 12-18 months. As a result, there will be an impact on PERS contribution rates and Unfunded Actuarial Liability (UAL) for each of our retirement plans.
DISCUSSION:
The City of Cathedral City has eight (8) separate retirement plans with CalPERS. The three (3) primary plans are commonly referred to as the Tier 1 (Classic) plans for Fire, Miscellaneous and Police. As of June 30, 2015, these plans have UAL of 81.5%, 81.7% and 81.6%, respectively. By authorizing an annual UAL payment, the City of Cathedral City can be proactive in reducing future interest costs. It is anticipated, this will result in a savings to the general fund of approximately $200,000 over the next 25 years (through FY 41/42).
FISCAL IMPACT:
$700,000 payment from the Insurance Fund (Fund 612)
ATTACHMENTS:
None