Member Counties in Statewide Association Realize Cost Savings from Pension Plan Review
||Statewide Association of Counties
A statewide association of counties sponsors a defined benefit pension plan for its member counties. Due to revenue declines resulting from the economic impact of COVID-19, it will be challenging for governmental entities to make the actuarially determined contributions to their defined benefit pension plans. Further, equity yields used to help fund plan benefits could be lower than previously anticipated due to the pandemic. The plan’s Board of Trustees requested help from CBIZ CBIZ Retirement Plan Services in managing plan costs.
In light of the pandemic, CBIZ RPS performed a comprehensive review of the funding policies and actuarial assumptions used to determine the annual contribution for each of the more than 100 counties participating in the plan. The focus was on managing short term plan costs while the virus impacts the economy and address the longer term funding needs as the economy returns to pre-pandemic strength. Approaches that reduced contributions by over 50% were considered.
After considering the impact on the plan’s funding ratio and long term funding requirements, the Board of Trustees focused on two changes to the plan’s funding policy. The short term cost savings of most plan sponsors resulting from these changes ranged from $10,000 per year to more than $1 million per year.
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