The returns should provide some relief for the county, which has consistently seen its pension costs grow by tens of millions of dollars annually, up to an estimated
The Sacramento County Employees' Retirement System had an investment return of 16.5 percent last year, more than double its long-term assumed rate of 7.5 percent, according to the report presented to the system's board. The system uses investment returns and contributions from employees and the county to pay retirement benefits.
The system's assets are worth more than
"We've had a tremendous amount of positive change," said
The full effect of the gains in 2013 won't be immediately realized because of the method the system uses to account for market losses or increases, a process called smoothing. Under that process, fluctuations in investment returns are spread out over seven years.
Still, the county will benefit from improved returns.
The system's "strong investment performance since the 2007-2009 market collapse -- 12.3% annually -- has substantially reduced the impact of the market collapse on employer pension costs over the last five years," said
The county will not get a sense of how much the market gains will affect its pension contributions until the system's actuary completes a report later this year. The report will recommend a rate for the county to pay.
Stensrud said he doesn't expect an increase in retirement costs due to retirees living longer, a dynamic that prompted the state's pension fund this week to approve changes that will lead to higher rates. That's because the county's retirement fund performs a study on lifespans every three years, he said.
County contributions have been increasing since the market collapse, but that is not solely the result of investment performance. Pension costs are also the result of benefit increases approved by county supervisors about a decade ago.
The county is trying to reduce its retirement costs by getting employees to pay more, said Stensrud, who has been asked by county staff to provide information as part of labor negotiations over pension contributions.
Many of the county's unions are working without a contract, including United Public Employees, Local 1. The county's largest union, with about 3,800 employees, has not been able to reach an agreement with management in large part because of management's pension demands, said
He said the county is demanding higher employee contributions.
In a written statement, the county's labor negotiator,
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