The Pension Board met on September 16th, 2015. With all of the recent market volatility the system returns were down for the month, -1.36%, but the YTD was 3.55%, the one year was 10.37%, the 3 year was 8.79% & the five year was 10.03%. The system is well funded and continues to improve.
We were presented the annual audit. The auditor stated everything was in order and there were no items of concern or discrepancies.
This section will be more technical but it is very important. We were presented with an Actuarial Valuation report for the system. As of June 30th, 2015 our funding ratio was up to 98.2%. It was 94.6% in 2014.
Using the current Governmental Accounting Standards Board (GASB) 67 method we are at 99.8% funding ratio. It is projected that our funding ratio will exceed 100% in 2016. The consultants stated we have an unusually good funding ratio when compared to peer pension systems. We use five year smoothing to value the assets to help with up and down markets. The Actuarial Valuation with smoothing accounts for other gains not yet fully realized (deferred gains). The system returns for last year was 3.4%, the five year with smoothing was 9.39%. Here’s the big take away from all of this…The system returns since 1989 have all been over the 7.5% pension target.
Several of the Board members will be meeting with the State Pension Commission during the morning of our November meeting, with the regular meeting being moved to the afternoon. This meeting will include discussions on how to fund a Cost of Living Adjustment for retirees or an annual stipend. Either of which may utilize a trigger for implementation. The system could be required to have a certain funding ratio before it could be approved. These will just be discussions and there are no timelines. If any legislation is proposed it will have to filter through the normal legislative process.
I hope you find these updates helpful and informative. If you have any questions, please contact me.
Jeff Pierce
State Trustee,
District 6
Oklahoma Police Pension & Retirement System