Category: Employer News

  • SCERS Board Maintains Long-Term Investment Return Assumption

    At its August 19 meeting, the SCERS Retirement Board approved several updates to the actuarial assumptions used to determine employer and employee contribution rates, including changes related to mortality and salary projections. The Board, however, declined to adopt its actuary’s recommendation to reduce the assumed long-term investment return—also known as the discount rate—from 6.75% to 6.50%.

    As part of its regular governance process, the Sacramento County Employees’ Retirement System (SCERS) conducts a comprehensive review of its actuarial assumptions every three years. [Read the Board item here.]

    The assumed investment return is an important component in determining how much must be contributed to fund future pension benefits. A lower investment return assumption means that a greater share of future benefit costs must be funded through employer and employee contributions rather than anticipated investment earnings.

    SCERS was 94% funded as of June 30, 2025. At the August meeting, the Board also received a preliminary report that the investment portfolio earned 14.8% for fiscal year 2025–26, bringing the approximately $16 billion retirement system closer to full funding.

    The funded ratio represents the relationship between the system’s assets and its long-term pension obligations. A system that is 100% funded has sufficient assets, based on its actuarial assumptions, to meet its projected benefit obligations.

    The Board will review its actuarial assumptions again in 2029. In the meantime, SCERS will continue to monitor its long-term liquidity and cash flow needs as its membership demographic profile matures and the number of retirees receiving benefits grows relative to the number of active members contributing to the system. Over time, these trends could require SCERS to adjust its investment strategy and reduce portfolio risk.

    For now, however, the Board determined that the case for lowering the investment return assumption was not compelling enough to justify the resulting increase in employer and employee contribution rates.

    Under the actuary’s recommendation, a 6.50% investment return assumption was estimated to provide a 62% likelihood of achieving or exceeding the assumed return in a given year. Based on current capital market assumptions, maintaining the 6.75% assumption provides an estimated 58% likelihood.

    While a lower investment return assumption would provide a larger cushion against the potential effects of future market losses, SCERS will also examine other approaches to strengthening its financial position. These may include increasing reserves and moderating the pace of contribution-rate reductions as the system moves closer to full funding.

    The Retirement Board will review and approve contribution rates for fiscal year 2027–28 at its December 16, 2026, meeting. Minor changes in contribution rates may result from the assumption updates approved by the Board, as well as the annual actuarial experience and investment results.

  • SCERS Reporting Requirements for Working Retirees

    This notice is to remind Sacramento County Employees’ Retirement System (SCERS) covered employers of the post-retirement employment reporting requirements.

    Per the SCERS Post-Retirement Employment Policy, participating employers shall provide SCERS, no less than semi-annually by January 31 and July 31 of each year, a report disclosing the names of retired members who have been employed, their hours worked, their duration of post-retirement service, and any extensions to the 36-month “limited duration” period. This policy also applies to SCERS retirees hired as contractors by SCERS-covered employers. In addition, section 7522.56 states that “…the rate of pay for the employment shall not be less than the minimum, nor exceed the maximum, paid by the employer to other employees performing comparable duties…”.

    SCERS employers shall also report the ending pay rate and pay rate or range for employees performing comparable duties when submitting their semi-annual report. Attached, please find a template you can use for the semi-annual report.

    Please note that SCERS requires a single, consolidated semi-annual report from each employer (e.g. County of Sacramento) versus receiving separate reports from individual departments or sub-units of the employer. Individual department reports will be returned.

    Additionally, SCERS requires confirmation from employers not employing SCERS retirees stating that fact.

    If you have any questions regarding post-retirement employment or the reporting requirements, please contact SCERS at (916) 874-9119.

    SCERS Semiannual Post-Retirement Employment Reporting Template

  • Annual Compensation Limits

    Federal and State laws place annual limits on the compensation that can be used to determine pension-eligible compensation for SCERS members. The limits are different for Legacy and PEPRA members. These are the annual compensation limits for 2026:

    • Legacy members: In accordance with Government Code section 31671 of the County Employees’ Retirement Law (CERL), the 2026 Annual Compensation Limit as set forth by the IRS under section 401(a)(17) is $360,000.
    • PEPRA members: In accordance with Government Code section 7522.10 of the County Employees’ Retirement Law (CERL), the 2026 Annual PEPRA Compensation Limit as set forth by the California Actuarial Advisory Panel is:
      • $159,733 for employees enrolled in Social Security
      • $191,679 for employees not enrolled in Social Security

    It is expected that SCERS’ Participating Employers monitor employee compensation in accordance with the limits specified above and limit the pensionable compensation accordingly. 

    This information was originally posted on the former SCERS website on November 3, 2025.

  • Employer Rates to Decrease for Fourth Year

    Employer contribution rates to SCERS will decrease next year as the pension fund continues to strengthen, based on an actuarial analysis being presented to the Board of Retirement on December 10.

    The reduction will mark the fourth year in a row of lower pension contributions due to larger-than-expected investment gains. The pension fund beat its investment target of 6.75% this past fiscal year, finishing with a 10.8% investment return.

    At its December meeting, the SCERS Board of Retirement will review the actuarial valuation and adopt contribution rates for the next fiscal year that begins July 1, 2026. The agenda materials can be found here. The Board meeting begins at 10 a.m. and will be live streamed from the quick link at scers.gov.

    The aggregate employer contribution rate will decrease by 1% of payroll to 27.52% for the 2026-27 fiscal year. Employee contribution rates will remain relatively stable, decreasing on average by 0.05% in 2026-27. The specific rates vary by employer and retirement tier.

    Overall, the long-term funding outlook for SCERS improved; SCERS ended the 2024-25 fiscal year with a funded status of 93.5%, an increase from the prior year’s 88.7%. The fund balance was $14.6 billion as of June 30, 2025, and has continued to grow to more than $15 billion today.

    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. SCERS targets a 100% funded status over a 20-year period and is on pace to achieve that goal.

    SCERS provides pension benefits to more than 33,000 employees, retirees, and beneficiaries.