Wednesday, 03 May 2017 07:34

EPFPPF Health Metric Moves Among Top Three Multibillion Dollar Systems




El Paso Firemen and Policemen’s Pension Fund Health Metric Moves Among Top Three Multibillion Dollar Systems


EL PASO (November 8, 2022) – The El Paso Firemen and Policemen’s Pension Fund has improved to earn a spot among Texas’ top three multi-billion-dollar pension systems ranked by their amortization period. The move higher is the result of a 14-year effort by the City of El Paso and the Pension Fund to honor the compensation promise for deferred retirement benefits earned by police and firefighters.

The system’s latest actuarial results for the year ended December 2021 calculated a 16.4-year combined amortization period for the otherwise separate asset pools of the firefighters and police contributions and investments. The amortization period metric is mandated in Texas and watched by the Texas Pension Review Board, an agency monitoring 100 pension funds for state employees, teachers, police, firefighters, municipal employees, and special districts.

“Considering that in 2007 our pension system had an infinite amortization period, meaning that it would never have had enough money to pay for current and future retirements, we are extremely pleased with overall system performance,” said Sean Shelton, the chairman of the EPFPPF Board of Trustees. “A sound pension system can keep officers and firefighters on the job for two or three decades, a benefit to every El Pasoan since experience matters so much in these jobs.”

Amortization periods are like home mortgages: they determine the number of years needed to match all outstanding retirement benefit commitments with the pension system’s assets. In the last legislative session, the Legislature reduced – and thus made more stringent – the amortization period. Failure to achieve a 30-year amortization period now triggers a Funding Soundness Restoration Plan process as remedy.

“We are comfortably in compliance with this latest calculation and nowhere near that threshold,” said Tyler Grossman, a retired El Paso police officer who now serves as the pension’s executive director and chief investment officer. “Our system, over the last 20-year period, averaged an 8.6 percent yearly return, similarly among the top-three pension system performers in Texas.”

The Pension Fund agreed in 2007 to improve the system’s funding by cutting $200 million retirement benefits; the City likewise added $215 million through issuance of pension obligation bonds in 2007 and 2009. The cuts and funding boost rectified chronic underfunding. They provided the system with the assets needed to earn better investment returns.

“Since 2009, our investment program along with the regular contributions of the City and first responders have caused our assets to increase to nearly $2 billion under management,” Grossman said. “Even with a poor global economy this year, we are positioned through our diversified portfolio to ride out the storm and come out well when this environment improves.”

The Pension Fund disburses to retirees about $90 million in deferred compensation. El Paso County is home to most of the retirees: about $65 million is disbursed to retirees living here.

“Our current police and firefighting workforce assumed the bulk of the benefit cuts in 2007 by agreeing to forego cost of living adjustments once they retire,” Shelton said. “Given the pension fund’s long-term track record, and that annual inflation is now running at 9% or more, it may be time to look at that issue again, so as to continue to retain our first responders in El Paso.”

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About the El Paso Firemen and Policemen’s Pension Fund (EPFPPF)
EPFPPF’s mission is to provide a secure retirement benefit plan for members through professional administration, prudent management of system assets, sound investment practices, and prompt and courteous delivery of accurate benefits and useful information to members. The Fund serves 889 active firefighter, 792 firefighter annuitants, 1,132 active police officers, and 1,133 police annuitants, with its approximate $1.94 billion in net assets.