Naples pensions had healthy 2017, but mound of debt lingers

Dec. 08--A year of healthy investment slightly reduced the Naples government pool of retirement debt, but pension board trustees said Friday they'll again urge the Naples City Council to consider increasing annual payments to eat even more into the $44 million unfunded liability.

With an expected rate of investment return at 7.5 percent, actual returns from fiscal 2017 as high as 9 percent shrunk the debt in each of the city's retirement plans for firefighters, police officers and general employees.

The $56 million pension plan for general employees earned a 9.1 percent return, reducing its unfunded liability to $13.4 million from $15.6 million. An 8.9 percent return reduced debt on the $49 million police pension plan to $18.5 million from $19.8 million. And with a 8.8 percent return, the $53 million firefighters pension plan reduced its liability to $12.5 million from $13.1 million.

Trustees said the city benefited from a strong market for its investment portfolio, which includes stock, municipal bonds and other securities.

"It's really no different than what everyone else is experiencing," said Councilwoman Ellen Seigel, also the general chair of the city's three pension boards.

Still facing a combined unfunded liability in the tens of millions, Seigel said the council should consider additional voluntary debt payments. The funded ratio for each of the three pension plans "needs to be higher," Seigel said.

"And for that to happen, more money would have to come from the city," Seigel said.

Trustees are expected to discuss pensions with the council at a meeting following the February municipal election.

Records show the city contributed $5,503,950 to the three retirement plans for its employees in fiscal 2017, about the same as the $5,514,829 contributed the previous year.

The general employee and firefighter pension plans are each 80 percent funded. The police pension plan is 72 percent funded. Typically, at least 80 percent is considered a healthy funding level.

General employees in fiscal 2017 paid $670,400 into their plan. Police officers paid $200,100. Firefighters paid $141,200.

The city's annual retirement contribution has more than doubled from just over $2 million in 2006, adjusted for inflation. During the recession, the Naples pension plans earned well below expected return rates for most years.

The combined unfunded liability for the three Naples retirement plans hit a $65 million peak in 2010.

In Summer 2016, before Naples leaders deliberated on their 2017 budget, trustees urged the council to begin making payments -- as much as $500,000 annually -- to help pay off retirement debt as the economy improved. The council didn't address the issue before passing the budget.

Fire Chief Pete DiMaria, chair of the firefighters pension board, renewed the call.

"Whatever achieves a lower unfunded liability and a more balanced fund is a positive for the pension plans," he said.

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