HomeMy WebLinkAbout2019 10 14 Consent 301 - Winter Springs Defined Pension Plan Assumed Rate Of Return Modification CONSENT AGENDA ITEM 301
1959 CITY COMMISSION AGENDA I OCTOBER 14, 2019 1 REGULAR
MEETING
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 7.75%. 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 0.25% (from
7.75% to 7.50%). This vote took place at the August 10, 2019 BOT Meeting. The BOT
may recommend further reductions in the future (target 7%). This action may
increase the required City contributions by approximately $149,000 per year. The
Florida State Retirement System (FRS) has recently followed suit with this
philosophy and lowered its rate to 7.40%.Additionally, decreasing the target rate of
return to 7.50% 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 and City Attorney
to prepare and execute any and all applicable documents necessaryto execute the
pension plan modifications.