HomeMy WebLinkAboutPension Trust August 21OCSD PENSION FUNDING
OCSD PENSION FUNDING
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
OCERS INVESTMENT RETURNS
Assumption Actual
OCSD PENSION FUNDING
OCSD PENSION FUNDING
•UAAL Pay Down 2014-2016, and 2019
•“Over-Funded” $XM?2018-19
•Future Funding Options
1)Make an Additional Payment to OCERS
2)Establish and Fund a 115 Pension Trust
OCSD PENSION FUNDING OPTIONS
•1)An Additional Contribution to OCERS
–Advantages
a) There are no additional fees placed on the contribution
b) Returns are generally higher than the OCSD portfolio
c)Avoids the need to establish a trust and the associated administration costs
d)A new procurement process would not be necessary
e)Process could begin immediately
–Disadvantages
a)More of OCSD funds would be invested with one entity
b)Once the funds are contributed, they can only be used for pension costs
c)OCSD would have less input into the investment decisions
OCSD PENSION FUNDING
•2)Use the Current Fund Manager and Establish
an OCSD 115 Pension Trust
–Advantages:
a) No new procurement process would not be required
b) Investment allowing potentially higher yields than OCSD’s investment portfolio
c) Process could begin immediately
–Disadvantages:
a) Although experienced, not the industry leader.
b) Less diversity of money management firms for OCSD’s investments.
c) Once the funds are contributed, they can only be used for pension costs.
OCSD PENSION FUNDING OPTIONS
•3)Join a Multi-Employer 115 Pension Trust
–Advantages:
a) Generally higher returns than OCSD’s portfolio
b) Added diversity of investment managers
c) More investment control as OCSD could provide direct investment input
–Disadvantages:
a) Additional fees related to trust management and funds management
OCSD PENSION FUNDING OPTIONS
•4)Establish a Self-Managed 115 Pension Trust
–OCSD could engage one of its consultants to assist in
setting up the trust and a few investment options and
manage the trust.
–However, staff did not examine this strategy in depth
due to lack of internal expertise and resources.
OCSD PENSION FUNDING
Program Rate 1-Yr Return 5-Yr Return
OCERS 6.90%$1,380,000 $6,900,000
PARS -Capital Appreciation 6.62%$1,324,000 $6,620,000
PARS -Balanced 5.92%$1,184,000 $5,920,000
PARS -Moderate 5.43%$1,086,000 $5,430,000
PARS –Mod. Conservative 4.34%$ 868,000 $4,340,000
PARS -Conservative 3.60%$ 720,000 $3,600,000
Brea –(PARS) (4-Year Avg)8.0%$1,600,000 $8,000,000
Irvine (PARS)1.70%$ 340,000 $1,700,000