59°F
weather icon Light Rain

Financial health of Nevada’s pension fund for public employees improves

CARSON CITY — The financial health of Nevada’s public employee pension improved in fiscal year 2016, with the funded ratio increasing to 74.1 percent from 73.2 percent the prior year.

The actuarial valuation report for the Public Employees’ Retirement System (PERS) was reviewed and approved Thursday by the seven-member board that oversees the plan. The report was prepared by Segal Consulting, an independent actuary contracted by PERS to do the analysis.

The report recommends no changes to the contribution rates for the plan, which are split 50-50 between employers and employees. The contribution rates are currently set at 28 percent for regular state employees and 40.5 percent for police and firefighters.

The board’s recommendation will be forwarded to Gov. Brian Sandoval and the Nevada Legislature with an implementation date of July 1, 2017. State law obligates the Legislature to adopt the contribution rates approved by the board.

“It’s working the way we expected,” said Tina Leiss, executive officer of PERS. “The contribution rates are stable and the funded ratio is increasing.”

The funded ratio, which compares a pension system’s total assets to its liabilities, has been improving for the past several years. It was at 69.3 percent in fiscal year 2013, below the 70 percent that investment researcher Morningstar considers the threshold for fiscally sound funds. But it remains well below its best performance of being 85 percent fully funded in 2000.

Looked at separately, the funded ratio for regular employees increased to 73.2 percent in 2016 from 72.4 percent in 2015. For police and fire, the ratio increased to 77.1 percent from 76.3 percent.

The unfunded liability for the plan increased to $12.56 billion in 2016 from $12.35 billion in 2015.

Funding ratios are important for the long-term health of a public pension plan. Plans that do not meet their funding goals face options of increasing mandatory contributions, which include public tax dollars, improving investment returns or reducing benefits to remain solvent.

Nevada’s pension fund saw a 2.3 percent return on its investments in 2016, below the long-term target rate of an 8 percent return but among the top performing funds in the country.

The Washington D.C.-based think tank the Urban Institute in 2014 gave Nevada’s pension plan an overall C grade. The plan got a B grade for making the required retirement contributions, but a D grade for its funding ratio. The average funding ratio for all states was 74 percent in its 2014 report.

An effort in the 2015 Nevada Legislature to make a fundamental change to the retirement plan going forward to shift it to more of a 401(k) type defined contribution plan used by private employers was unsuccessful. The plan is now a defined benefit plan where retirees receive a set pension based primarily on salary and years of service.

The PERS fund was worth $35 billion through June 30. It has 103,000 active members as of the end of fiscal 2015. The plan covers nearly all state and local government employees in Nevada, including public school teachers.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-461-3820. Follow @seanw801 on Twitter.

Don't miss the big stories. Like us on Facebook.
Politics Videos
Accused murder mastermind Frank LaPena is granted a pardon - VIDEO
A onetime Las Vegas casino bell captain who spent 25 years in prison as the accused mastermind in a notorious 1974 contract murder won his last legal battle for freedom Wednesday when the state Pardons Board granted him a conditional pardon restoring all his civil rights. (James Schaeffer / Las Vegas Review-Journal)
The Middle: Nonpartisan voters and the 2020 election
How will the growing segment of nonpartisan or independent voters — those who have not registered with either political party, or who have left partisan politics behind — vote in 2020?
Tomi Lahren Speaks at UNLV - VIDEO
Fox News contributor and UNLV alumna Tomi Lahren returned to campus Wednesday night for a speech, titled “Stay Triggered,” that drew an auditorium of supporters as well as a group of protesters outside. (James Schaeffer/Las Vegas Review-Journal)
Bernie Sanders released from Las Vegas hospital - VIDEO
Sen. Bernie Sanders, I-Vt., issues a statement after he was released from Desert Springs Hospital Medical Center on Friday, Oct. 4, 2019, after suffering a heart attack earlier in the week. (Bernie Sanders via Twitter)
Democratic presidential candidates speak on impeachment - VIDEO
Democratic presidential candidates attending the March for Our Lives/Giffords Gun Safety Forum in Las Vegas comment on possible impeachment proceedings. (Las Vegas Review-Journal)
Joe Biden Las Vegas Rally Highlights - VIDEO
2020 presidential candidate, Joe Biden, came to Las Vegas to talk guns, climate change and the Ukranian-Trump scandal. Biden was interrupted by a protestor who sat amongst supporters at the rally and continued with his speech. (Angus Kelly & James Schaeffer / Las Vegas Review-Journal)
Joe Biden comments on Trump and his campaign efforts in Nevada - VIDEO
After an impeachment inquiry was opened on Donald Trump, Joe Biden talks with Review-Journal politics reporter Rory Appleton about Trump and his campaign in Nevada. (Angus Kelly & James Schaeffer / Las Vegas Review-Journal)
Bernie Sanders Unveils Affordable Housing Plan - Video
Bernie Sanders sits down with the Las Vegas Review-Journal to talk about his new affordable housing plan he unveiled at Plumbers & Pipefitters.
Jim Marchant talks gun control and Dreamers - Video
Republican Candidate for District 4 Jim Marchant talks about gun control and immigration policies. (Las Vegas Review-Journal)
Hurricanes, Gender, and Science in the Press
Imagine if the mainstream media’s current hurricane-sized obsession with scientific accuracy applied to gender.
Cory Booker on college tuition and minimum wage
Cory Booker talks on the RJ Politics podcast about college debt, informing workers about their rights and livable wages.
Nevada Politics Today: Teacher raises - VIDEO
Jason Goudie, the chief financial officer for the Clark County School District, talks about teacher pay and raises. (Las Vegas Review-Journal)
THE LATEST
Yucca Mountain bill in House faces steep climb

A House committee will consider a bill Tuesday that would proceed with development of the Yucca Mountain project, but it faces an uncertain future on the floor and in the Senate.