ROSWELL, Ga. — The City of Roswell is transitioning to a new retirement plan provider after staff uncovered that the unfunded liability in its pension plan more than doubled over the past decade.
Against the actuarial assumption that the funded status would increase, the trend has gone in the opposite direction. Liability has outpaced assets, causing unfunded pension liability to grow from $9.4 million in 2014 to $22.3 million in 2023.
“That’s so illogical, it’s not even funny in the financial world,” Mayor Kurt Wilson said at the Feb. 13 meeting of the Administration and Finance and Recreation and Park Committee. “I can’t imagine when you guys first got this. You must have been aghast when you saw this … Talk about lack of fiduciary responsibility.”
The city’s current unfunded liability payment is $3.2 million, representing around 65 percent of its contribution.
Joe Griffin, an actuary working with the city, told officials at the committee meeting that the unforeseen trend is likely due to the Georgia Municipal Association’s assumption based on the larger group of clients, rather than the city alone. For its defined benefit (DB) pension plan, the city was a participating member in the GMA’s Georgia Municipal Employee Benefit System Retirement Fund, created in 1965.
For the past three decades, the city has used MissionSquare as a vendor for its defined contribution (DC) plan. But, best practices call for a competitive bid process every 5 years for retirement plan providers.
“So, what we’re seeing is losses after losses after losses,” Griffin said.
All the city’s assets will be in the hands of Transamerica going forward, which includes $49.4 million in its DC plan, $98 million in its frozen DB plan as well as its deferred compensation plan. The pension plan has been closed to new hires since 2011, and its…
Read the full article here
