Feb 23, 2018 3 min read

For the second time in nearly four years, the Washington County Retirement Board has scaled back its assumed rate of return on pension investments.

The board voted at its first meeting this year in favor of a 6.75 assumed rate of return, replacing the previous 7 percent that had been the benchmark since mid-2014.

“It gives us a longer-term safety net by doing that,” said county commission Vice Chairman Diana Irey Vaughan, who, with her colleagues, is a member of the retirement board that meets quarterly.

The assumed rate of return is a prediction of what the county’s pension investments will earn over a long period of time.

The board, which also includes county Treasurer Francis King and county Controller Michael Namie, voted unanimously.

Lee Martin, the county’s pension investment consultant with Chicago-based Marquette Associates, told the board, “You’re in a good funding position now, keeping that pension fund very solid.”

Martin said over the past five years, Washington County’s pension fund has ranked in the 16th percentile, meaning it has outperformed 84 percent of U.S. public pension funds.

“Your performance is compared to all other public, defined-benefit pension funds in the United States that are on the InvestorForce investment consultants’ reporting platform.”

The county finalized its sale of the Washington County Health Center in December, which will affect the next actuarial report on the pension fund.

Joshua Hatfield, Washington County finance director, said information provided by Marquette Associates in an asset liability study showed that the actuarially determined contribution will decrease by $1.18 million for each of the next 15 years following the sale.

The actuarially determined contribution is what the county is required to put into the pension fund from a number of sources, including property taxpayer dollars, which cover approximately 52 percent, and reimbursable federal and state grants, which cover the remainder.

Assuming all actuarial assumptions are met, these savings from the jettisoning of the health center are expected to total approximately $17.3 million over the next 15-year period.

After 15 years, the amortization gains from the sale drop off; however, the actuarially defined contribution will still be lower than the base case by approximately $700,000 each year.

The most recent figures as of Jan 1, 2017, as prepared by the county’s actuary, Korn Ferry Hay Group, showed 730 retirees and beneficiaries receiving benefits.

There were 75 vested plan members entitled to but not yet receiving benefits, and 1,046 active plan members.

As of Feb. 14, the total fund value was $167,360,533, growing $70.4 million over the last five years.

State law requires the funding of public employees’ pensions with taxpayer dollars, so the board’s decisions affect those who pay county and state taxes.

The County Pension Law, Act 96 of 1971, governs the establishment and operation of a retirement system for employees in each of the state’s 67 counties and requires a defined benefit plan.

In Washington County, workers contribute 7 percent of their earnings to their pension plans.