HomeMy WebLinkAbout2020 12 14 Consent 303 - Winter Springs Defined Pension Plan Assumed Rate Of Return Modification • CONSENT AGENDA ITEM 303
,n m=ared CITY COMMISSION AGENDA I DECEMBER 14, 2020 REGULAR MEETING
1959
TITLE
Winter Springs Defined Pension Plan Assumed Rate Of Return Modification
SUMMARY
The current assumed rate of return for the Winter Springs Defined Benefit
Pension Plan is 7.50%. This rate is no longer the standard in the investment
field and forces the portfolio manager to increase the portfolio's risk
exposure. At the recommendation of the City's Investment Advisor AnclCo,
and the City's Actuary Gabriel Roeder Smith & Company, the Board of
Trustees (BOT)voted unanimously to recommend to the Commission an
assumption rate reduction of 0.10% (from 7.50% to 7.40%). This vote took
place at the November 12, 2020 BOT Meeting. The BOT may recommend
further reductions in the future (target 7%). This action may increase the
required City contributions by approximately $60,000 per year. The Florida
State Retirement System (FRS) has recently followed suit with this philosophy
and lowered its rate from 7.40% to 7.20%. Additionally, decreasing the target
rate of return to 7.40% will also impact the Unfunded Liability of the pension
in the short-term; however, the long-term benefit of reducing the rate of
return far outweigh any short-term impacts.
RECOMMENDATION
Staff recommends the Commission authorize the City Manager to prepare
and execute any and all applicable documents necessary to execute the
pension plan modifications.
289