San Luis Obispo County employees will again pay more to help fully fund the county pension plan, the Board of Supervisors unanimously decided Tuesday.
This is the third year in a row that supervisors have approved an increase in contribution rates into the San Luis Obispo County Pension Trust — an independent retirement system that provides benefits to employees of the county and some other agencies. Contribution rates are set by the trust’s Board of Trustees and must be approved by the supervisors.
The increase is needed due to a shortfall caused by three factors, according to the trust managers:
▪ Fund managers saw lower than expected return on investments.
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▪ More county staff retired recently than expected.
▪ Retirees life spans are longer than expected.
The vote Tuesday calls for a combined 2.38 percent pension rate increase that will be implemented January 1, 2018. That comes on the heels of a 5.17 percent increase in 2017 and a 1.02 percent increase in 2016.
How public agencies will pay for rising pension costs has been a common question across the state, especially for those in the California Public Employees’ Retirement system, or CalPERS. The city of San Luis Obispo is looking to address its projected budget shorfall from rising pension costs by cutting city services or asking employees to contribute more.
Managers of the county Pension Trust said they’ve been able to prevent larger increases by keeping a close watch on the fund, lowering the expected return on investments and updating mortality assumptions.
“As a result, the forecast for pension cost increases for the county are less dramatic than those facing CalPERS agencies,” a staff report says.
Rates paid by employees are based on the employee’s age of entry, tier, bargaining unit and classification.