Author: Bill Schrier

Retirement System now funded at 80.5% up from 79.7%

Bill Schrier

 

SCERS’ investments continued to perform very well in the second quarter, April through July 2026.  The returns were 7.51% for the quarter and 14.78% for the past year, after investment fees.  Over the past 10 years the investments have yielded 9.19%, after investment fees.  In comparison to 90 to 100 other large public pension funds, we are performing about average recently, but that 9.19% on an annualized basis. This is better than three-fourths (75%) of the others.

Most importantly, SCERS investments now have and estimated 80.5% of the funds necessary to pay retiree pensions, assuming we all live as long as the actuaries expect.  The goal is 100% funding, of course.  That triggers an increase in the “floor COLA”.  Today that “floor COLA” is 65%.  At 100% funding, it rises to 70%.  The law states that the purchasing power of any single pension must always retain 65% of its original purchasing power.  So an increase to 70% means a significant bump in pensions City employees who retired a number of years ago, who are about 5% of those presently receiving pensions.  The annual COLA affecting all pensions remains at 1.5%.  100% funding will not affect that.  The graph at right shows the progress in getting to 100% since 2015.  The funded status was 76.5% in January 2025, and 79.7% in January 2026.

The stock market has been doing well, for considerable period.  However, the Retirement Fund is a mix of investments.  About 47% is in “public equity”, that is the stock markets, 11% in private equity, 26% in fixed income such as the bond market, 9% in real estate, and 3% in infrastructure, such as pipelines and fiber optic cables.

The information above is from the SCERS Investment Committee meeting of August 27, 2026.  Such meetings are open to public participation either in-person or via Microsoft Teams.

While this is all good news, there are clouds on the horizon, as you all know.  The national debt is at 40 trillion dollars, diesel and gasoline prices are high which affects the costs of all goods, and tariffs affect the costs of most imports.  All of this contributes to inflation, which is already above 3% for the year.

Comments and suggestions? Email me bill@schrier.org or bill.schrier-c@seattle.gov 

SCERS Board Votes to reduce City’s Contribution to the Pension Fund to 13.48%

Bill Schrier

 

On July 9th the Seattle City Employees Retirement System (SCERS) Board of Administration voted to reduce the City’s contribution to the retirement fund from the present 15.06% of salaries to 13.48%.  The vote was 3 to zero and I abstained from the vote.  The City contributed about $178 million to the pension fund in 2024.  The July 9th action will save the City about $12-17 million (my estimate) in 2027 which it can spend on other needs.   The final decision is up to the City Council.

I originally considered just voting “no”.  SCERS is managed well and is on track to be at 100% funding in 2042.  The City contributes extra dollars every year to make up a shortfall which occurred in the recessions of the early 2000s. But why is 2042 such a magical date?  Why don’t we aim to be fully funded in 2040 or 2038?  The City would have to contribute more than the “actuarially required minimum” to make that happen.  And in 2027, 13.48% is that minimum contribution. 

The 100% is important. Right now the law says the pension must retain 65% of its purchasing power. At 100% funding, that “floor COLA” rises to 70%.  Employees who retired a number of years ago would get a boost in their monthly retirement checks.

Now is a perfect opportunity to play “catch up”.  If we set the City’s contribution at, say, 14% or 14.5%, rather than the “required minimum” of 13.48%, the City budget would still get a break – something less than $17 million – and we would get to 100% faster.

The counter argument is this:  we want the City Council to keep faith with the concept of spending exactly the actuarially required minimum. Bad times may return – another recession perhaps – or a huge downtown in the stock market or real estate.  And at that point the Council would have to increase the City’s contribution, further straining its overall budget.

I get that.  So instead of voting a straight “no”, I abstained.

The next issue of the ARSCE News will have more about the results of the July 9th meeting.  It should be in ARSCE members’ mailboxes in mid-August.

Image: Changes in the Actuarily Required Minimum Contribution.  Source:  Milliman Actuarial Valuation Report 2026

 

About this Blog

Bill Schrier
Photo of Seattle at Sunset, with Mount Rainier in the background.
Seattle at Sunset

I’m Bill Schrier and I write this blog.  The members of the Seattle City Employees Retirement System (SCERS) recently elected me as a member (trustee) of the Board of Administration which oversees the Retirement System.  That Board has seven members.  The Retirement System has over 21,000 members, assets of over $4 billion, and disburses almost $300 million a year in benefits to retired City employees or their beneficiaries.  The Board’s agendas, minutes and other information such as Annual Reports, Financial Statements and Valuation studies are all public information and online here.

All that online material is full of numbers and jargon.  In one sense that’s good – I believe SCERS is quite well managed.  Finances fell into a real hole in 2010.  The Retirement System, funded at over 100% in 2000 and still funded at 92.4% in 2008, fell to 62.0% by 2010. Yes, there was the 2008 recession, but SCERS finances were quite poorly managed.  Indeed, only one other major municipal pension system in the United States performed worse.  In the twenty-teens (2010 to 2019) SCERS leadership changed.  The new leadership hired professional investment managers.  As a result, funding improved to the present 76%, not great, but on a recovery trajectory.

Investment terminology and statistics are important to managing four billion dollars, but often not intelligible to most of us, including me.   With this blog, I hope to give insight into the decisions of the SCERS Board and the data behind them.  I’ll try to explain my votes on those decisions, and the logic (or gut feeling!) behind the votes.  And I’ll also be posting about other aspects of “retirement” including its joys and challenges.

My family and I live in West Seattle.  I love this City, and I’m proud to live here.  I sometimes disagree with the decisions and actions of Seattle’s Mayor and City Councilmembers.  That was also true when I was a City employee.  Asked by friends and neighbors about the actions of the mayor and council, I would often just shrug and say “nobody elected me”.  BUT, in terms of the City’s Retirement System, that’s no longer true – you DID elect me.   I will take that responsibility seriously, knowing, for some decisions, the City Council and Mayor often have the last word.

Contact me via email.  Personal:  bill@schrier.org.  Official: bill.schrier-c@seattle.gov.