At its Wednesday, December 7 meeting, the SCERS Board of Retirement will be reviewing the actuarial valuation and adopting contribution rates for the next fiscal year. The aggregate employer contribution rate is dropping from 31.74% of payroll to 31.12% of payroll for 2023-24 fiscal year.

Employee contribution rates are not impacted by investment gains or losses, and will remain relatively flat from the prior year. The specific rates vary by employer and retirement tier. 

The agenda materials can be found here. The Board meeting begins at 10 a.m. Wednesday and will be live-streamed at scers.org.

Overall, the long-term funding outlook for SCERS remains strong after the pension fund experienced a rare loss in the 2021-22 fiscal year. SCERS ended the June 30, 2022 fiscal year with a funded status of 87.1%, a decrease from last year’s 94.4%. 

The funded status is the ratio of pension assets to liabilities. It represents a “temperature check” on how the pension fund is performing at a point in time and guides SCERS’ actuaries on how to adjust contribution rates to ensure the funding is sufficient over the long term to support the benefit obligations due to more than 30,000 employees, retirees, and beneficiaries. SCERS targets a 100% funded status over a 20-year period, and remains on track to achieve that goal.

“SCERS was closing in on a fully funded plan last year, which created a cushion to absorb future investment losses that are inevitable,” said Eric Stern, SCERS Chief Executive Officer. “We’re holding up well under a turbulent time and have a strong foundation to maintain our growth and stability through different economic cycles.”

SCERS experienced a -3.5% investment loss in 2021-22, after seeing a record 28.8% investment return in 2020-21. Because SCERS smooths gains and losses over a 7-year period to set contribution rates for employers, the previous gains exceed the recent investment loss, which results in a decrease in contribution rates for SCERS’ employers. The prior-year gains are also still available to mitigate future losses.