Report: County's Pension System 85 Percent Funded

By City News Service

Riverside County’s pension system is underfunded by more than a billion dollars, but the asset side of the equation is strong due to reforms implemented over the last few years, according to a report reviewed by the Board of Supervisors on Tuesday.

The county Pension Advisory Review Committee’s annual report stated that the county’s defined-benefit retirement system is roughly 85 percent funded, with $6.71 billion in assets and $1.28 billion in unfunded liabilities.

“I think we’re well-funded,” said Board of Supervisors Chairman Marion Ashley. “Our savings are building up. If you have pensions, you have to pay for them.”

Executive Office financial analyst Ivan Chan noted that the county will have $27 million in additional costs over the next year -- $16 million of which will have to be drawn directly from the general fund -- to cover investment obligations managed by the California Public Employees’ Retirement System. However, Chan appeared upbeat about the county’s financial trajectory.

The funding status of the county’s annuities improved over last year’s level, which had dropped to 80 percent after revisions to accounting methodologies used by CalPERS.

As with last year’s digest, the PARC report touted the anticipated annual savings the county will realize as a result of pension reforms implemented in 2012. The projected savings in the 2015-16 fiscal year is $93.4 million.

Under pre-2012 plans negotiated with collective bargaining units, public safety workers accrued retirement earnings according to a “3 percent at 50” formula, fixing compensation at 3 percent of the average of the three highest- paid years of an employee’s career, multiplied by the number of years on the job. An employee could begin collecting full retirement at age 50.

Miscellaneous workers, including clerks, technicians and nurses, received benefits based on a “3 percent at 60” formula.

Beginning in September 2012, new hires in the safety category began accruing retirement benefits under a 2 percent at 50 formula, while newly hired miscellaneous workers began accruing benefits under a 2 percent at 60 formula.

Legislation later signed into law added another category for public sector employees hired after Jan. 1, 2013. The lower benefit formula is 2 percent at 62 for miscellaneous and 2.7 percent at 57 for safety workers.