Screen Reader Users: Make sure settings include reading strikethrough and underline font attributes.
The City of Seattle
title
An ordinance relating to the Firefighters’ Pension Fund; repealing Section 1 of Ordinance 117216 as amended by Ordinances 118814, 122293, 122859, 123459, 124057, 124640, and 125190; adopting updated Fund Policies for the Firefighters’ Pension Fund; and superseding Exhibit N to Resolution 30379.
body
Recitals:
Ordinance 117216, adopted by the City Council in 1994, established an actuarial account within the Firefighters’ Pension Fund that would accumulate sufficient funding to fully amortize the fund’s remaining pension liabilities.
The requirement for the City’s General Fund to concurrently fund ongoing pension obligations and make transfers to the actuarial account has become unsustainable given broader fiscal pressures and more immediate priorities for the City’s General Fund.
The City has always fulfilled its obligations to the Firefighters’ Pension Fund with the current pay-as-you-go funding approach, which is the accepted approach of similar pension funds.
By closing the actuarial account, the existing balance will help guarantee these obligations and alleviate General Fund pressures. The account closure will not change the City’s commitment to funding all remaining pension benefits in full.
Fund Policies guiding the administration of the Firefighters’ Pension Fund were last adopted by Resolution 30379 in 2001 and necessitate update as a result of these changes. Therefore,
Be it ordained by The City of Seattle as follows:
Section 1. Section 1 of Ordinance 117216, amended by Ordinances 118814, 122293, 122859, 123459, 124057, 124640, and 125190, is repealed:
((Section 1. The following funding policy is adopted with respect to the Firefighters’ Pension Fund (the “Fund”):
A. Beginning in 1994, the City will place in a separate “Actuarial Account” within the Fund each year an amount which is sufficient to fully amortize as described below the estimated remaining pension liabilities of the Fund by December 31, 2028. The Actuarial Account will be funded as follows:
1. Each year, the city will appropriate a “Level Payment Amount” to the Fund. The Level Payment Amount is intended to be constant for each year between 1994 and 2028. If necessary, the Level Payment Amount will be modified every two years as specified in subsection A(4) below.
2. In each year, the Level Payment Amount will be the sum of the expected current pension obligations for that year and a contribution to the Actuarial Account. Thus, the transfer to the Actuarial Account may vary in amount from year to year.
3. In some years, the expected current pension obligations will exceed the Level Payment Amount. In such years, the City will appropriate additional funds to the Fund in order to cover all expected current pension obligations. No contribution will be made to the Actuarial Account in such years.
4. The actuarial calculations of the Level Payment Amount and of the portion to be contributed to the actuarial Account shall be performed in a manner consistent with Attachment A to Ordinance 118814.
5. Beginning in 1998, the Level Payment Amount will be recalculated by June 30 of each even-numbered year by a qualified actuary retained by the Board. While the Level Payment Amount is generally expected to remain constant over time, small variations are likely due to changes in mortality, inflation, and other factors. In addition, the actuary will calculate the expected current pension obligations for each of the two following years. The contribution to the Actuarial Account will be defined as the difference between the Level Payment Amount and the expected current pension obligations for each year. The City will use the actuary’s figures in establishing the Level Payment Amount in the biennial budget for the following two (2) years, subject to Board confirmation. In the mid-biennium, the City shall revise the expected current pension obligations based on the actuary’s latest estimates, subject to Board confirmation. This may change the contribution to the Actuarial Account in the second year of each biennium depending on any increases or decreases in expected current pension obligations.
6. In the event that actual current pension obligations for any year exceed the amounts projected by the actuary and included in the budget, The City will appropriate additional amounts to cover any shortfall. Transfers to the Actuarial Account will not be changed once they are included in the Adopted Budget.
7. Funds in the Actuarial Account are for the purpose of meeting pension obligations and funds will not be transferred from the Actuarial Account for any other purpose unless and until all pension obligations of the Fund have been satisfied.
B. Based on actuarial projections, it is anticipated that the Level Payment Amount will generally exceed the expected current pension obligations.
C. In years in which a contribution is to be made to the Actuarial Account, the transfer will occur in two equal installments on the last day of April and the last day of October. The amount transferred to the Actuarial Account on each date will be one-half the total amount included as a transfer to the Actuarial Account in the Adopted Budget. The City Finance Director is authorized to make these transfers. Funds in the Actuarial Account will be invested in order to receive the maximum possible returns consistent with State law, the City’s investment policies, and the objectives of the Actuarial Account. The City Finance Director will determine how the funds in the Actuarial Account will be invested, consistent with RCW 41.16.040 (4), which confirmation by the Board. The City Finance Director will report to the Board on the status of the Actuarial Account in May and November of each year.
D. Beginning on January 1, 2024 it is anticipated that funds accumulated in the Actuarial Account will be sufficient to cover all future pension costs of the Fund. If there are pension liabilities that cannot be met from the balance in the Actuarial Account, the City shall appropriate such funds as are required to pay all pension costs.
E. This policy does not change current practices for budgeting for medical and administrative costs of the Firefighters’ Pension Fund.
F. The Fund shall be administered pursuant to RCW 41.16 as amended.))
Section 2. Revised Fund Policies for the Firefighters’ Pension Fund, attached to this ordinance as Attachment A, are adopted, superseding Exhibit N to Resolution 30379.
Attachment:
Attachment A - Firefighters’ Pension Fund Policies
This ordinance shall take effect as provided by Seattle Municipal Code Sections 1.04.020 and 1.04.070.
Passed by the City Council and signed in open session in authentication of its passage on .
President of the City Council
on .
Katie B. Wilson, Mayor
Lenné Dedman, City Clerk