The council this month chose the
The new trust fund will be consolidated with another city trust fund already administrated by PARS for the city's other post-employment benefits, which are non-pension. The two accounts would still be managed separately. The idea behind putting both accounts under one trust is to reduce the amount of fees the city would have to pay on the trust to PARS,
Total fees are expected to be at a rate of 1 percent annually, according to city staff.
"It might make sense to pay down certain debts we already have and we know exactly the return we're going to get on it by paying those down as opposed to funding a pot and potentially getting a higher rate of return," Lucan said during the meeting.
Another option that Lucan said he hopes will be looked at is leveraging the city's nearly
In an interview last week, Lucan said the idea behind this proposal would be to reduce interest payments by paying down the bonds using money borrowed from the
CalPERS has also been lowering its discount rate since 2017. The discount rate essentially indicates how much CalPERS investments of employer and employee pension payments are expected to earn in the future. The rate is being lowered from about 7.4 percent in 2017 to 7 percent by the 2019-20 fiscal year, which begins in July. This results in employers, like the city, and employees having to contribute more to the pension system. Unfunded liabilities for employers like
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