Tuesday, December 19, 2017 – 11:30 p.m.
It’s a not so Merry Christmas for the San Bernardino County, California pension system, which took another hit in its latest fiscal year.
The county’s pension fund, San Bernardino County Employees Retirement Association (SBCERA), now sits at 77.87% funded as of June 30, 2016. This means the fund can payout roughly 77.9 cents of every pension dollar promised.
It’s a number that is slightly up from 76.82% from the year ago period.
However! The system’s unfunded actuarial accrued liability (UAAL) increased from $2.47 billion to $2.64 billion.
The aforementioned numbers are based upon the fund actuary’s own market valuation analysis. This means that the figures apply to the actual market value of the underlying investments in the pension fund, as of June 30, 2017.
SBCERA’s investments, whether real estate, equity or debt, are marked to market on June 30 of each year and compared to the dollar amount of pension obligations. Any shortfall is refereed to as an unfunded liability.
The fund and county would rather tout the actuarial valuation analysis figures because they paint a rosier picture by delaying the recognition of losses for a few years, all in the hope that they’ll go away or shrink.
The table is listed on page vi of the SBCERA annual actuary’s report.
You can read and download the report here: SBCERA – Actuarial Valuation and Review – 06302017
The losses, if they continue or remain, will require the county general fund to increase its annual contribution to support the system.
But the Trump stock market rally, should it continue, will likely help drive the number in a more positive direction.
The odds of a steady rise over the next few years is actually pretty good for the conservatively-positioned fund.
Another factor contributing to the underfunded status is the recent lowering of the assumed annual rate of return from 7.5% to 7.25%.
Plan trustees declined to lower the target to 7.0% the request of the actuaries. An unwise decision in my opinion.