Board of Pensions finances are robust and the funding of its plans and programs secure, Executive Vice President Michael F. Fallon Jr., the Chief Financial Officer, reported to the Board of Directors at its summer meeting June 20-22 in Minneapolis.
Executive Vice President Patricia M. Haines, Chief Benefits Officer, and Todd Ingves, Director, Information Management, presented the full Board of Directors with information about the process for determining annual revenue needs and its ultimate impact on Medical Plan pricing. Their presentation was of particular benefit to Directors who do not serve on the Healthcare Committee. The Committee is responsible for reviewing financial forecasts and projections prepared by Board of Pensions staff, in collaboration with the Board’s actuary, and making appropriate recommendations on dues actions to the Board of Directors.
Directors hold line on Pastor’s Participation medical dues
According to “The Board Bulletin Summer 2019,” the Board of Directors affirmed that medical dues for Pastor’s Participation should remain unchanged for 2020. The affirmation followed the Healthcare Committee recommendation that medical dues remain at 25 percent of effective salary for the third consecutive year.
Pastor’s Participation medical dues are for family coverage. The minimum and maximum medical dues bases for Pastor’s Participation in 2020 will remain at $44,000 and $124,000, respectively. These are the minimum and maximum salaries on which employers are billed for medical coverage.
The 2020 costs for medical coverage through menu options, unique to each employer, will be available online through Benefits Connect in mid-July, when employers can access their Employer Agreements and begin selecting benefits to offer their employees during annual enrollment.
2020 Medicare Supplement increase not to exceed $15 a month
The Board of Directors authorized staff to establish 2020 rates for the Medicare Supplement Plan, with any increase not to exceed $15 per participant per month. Staff announces rates in the fall, when the most up-to-date information on claims experience is available. A rate change would be effective January 1, 2020. Based on Milliman’s experience analysis and its forecast of future costs, an increase in rates is anticipated. In its review of this information, the Healthcare Committee noted that rates have remained the same for the last two years.
Portfolio long-term return 10.3 percent for 10 years ended April 30, 2019
Judith D. Freyer, Executive Vice President and Chief Investment Officer, reviewed the Board of Pensions Balanced Investment Portfolio year-to-date 2019 performance of 9.9 percent within a framework of global economic and political events. The portfolio is invested for the long term, with a return of 10.3 percent for the 10 years ended April 30, 2019, and 6.7 percent for the 20 years ended April 30, 2019.
Freyer provided an overview of investment strategies for 2019. The portfolio is the investment fund for the Pension Plan, Death and Disability Plan, Endowment Fund, Assistance Program, and medical reserve assets, as well as for restricted gifts made to the Board of Pensions. On April 30, 2019, the portfolio had a market value of $9.8 billion.
Suzanne P. Welsh, Chair of the Investment Committee, provided an overview of the work of the Investment Committee on behalf of Benefits Plan members and their beneficiaries.
The Committee reviewed the alternative investment components of the Balanced Investment Portfolio and approved commitments to distressed debt and private equity limited partnerships.
The Committee confirmed that the April 30, 2019, asset allocation of 35.4 percent in U.S. stocks, 20 percent in international stocks, 29.8 percent in fixed income, and 14.8 percent in other assets is within approved ranges. The Committee affirmed current long-term strategic asset allocation ranges for the Balanced Investment Portfolio.
Counsel and auditor engagements
The Directors reaffirmed the designation of the following advisers and auditors:
- Willis Towers Watson, for pension and death and disability actuarial counsel
- Milliman Inc., for medical actuarial counsel
- Ballard Spahr LLP, for legal counsel
- Deloitte & Touche LLP, as external auditors
- Protiviti, as internal auditors
The next meeting of the Board of Directors will be in Denver, Oct. 24-26, 2019. For further information, email the Corporate Secretary or call 215-587-7600.