PARS OPEB Trust Now Available in South Carolina

Categories: Hot Sheets,OPEB/GASB 45/75
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The Housing Authority of Florence in South Carolina wanted to pre-fund its entire retiree healthcare or “OPEB” liabilities to secure the benefit for the future. The Authority went a step further than just reviewing its options within South Carolina; instead it scoured the country looking for a program that would best fit its needs. The Authority found that solution in a firm, Public Agency Retirement Services (PARS), which developed and administers the largest private multiple employer OPEB trust program in the country, with over 135 public entity members and almost $1 billion in assets. The Authority was further pleased that the program’s trustee is U.S. Bank, the largest OPEB trustee in the nation as well as 5th largest commercial bank.

The Authority sought several objectives, which PARS was able to fulfill:

  • Multiple employer trust structure – The Authority didn’t want the burden and costs of setting up and running its own single employer trust. With PARS’ multiple employer model, that has already been vetted for legal compliance in South Carolina, it avoided upfront setup costs, as well as steep legal and IRS fees.
  • Economies of scale – The Authority wanted to obtain investment economies of scale on its $800,000 contribution by joining other agencies in a large scale trust with investment pools. The trust maintains separate accounts for each member but pools investments for cost efficiencies with no risk-sharing.
  • Ready and easy to use – The program’s quick and easy implementation meant that the Authority met its end of fiscal year contribution target date of September 30, 2014. To join the existing PARS trust, the Authority simply needed to adopt a resolution. Once adopted, funding occurred in weeks, not months.
  • Security – The Authority wanted to secure the benefits of its current and future retirees, regardless of what might happen in the future due to federal funding or budgetary issues. By joining an IRS-approved trust that utilizes an industry-leading corporate trustee, the funding of these benefits are properly protected and will be safeguarded for when the Authority’s retirees need them.
  • Offset liabilities – Contributions into the trust are assets that will offset liabilities on the Authority’s future financial statements. By participating in this trust, the Authority’s liabilities will continue to decrease as assets in the trust grow.
  • Local control – The Housing Authority of Florence maintains control and flexibility of its assets under the PARS OPEB Trust Program – Contribution and distribution amounts and timings, in addition to actuarial methods and assumptions remain at the Authority’s discretion.
  • Personalized services – The Housing Authority of Florence benefits from ongoing customized service from a PARS and U.S. Bank service team that includes a Senior Portfolio Manager who personalized an investment policy statement according to the Authority’s needs and goals. On an ongoing basis, the Authority also has access to a South Carolina-based Client Services Coordinator who is available to meet or call whenever the need arises.

Now is the time to contact PARS to see how we can start reducing your OPEB liability and make your assets work for you.

The PARS OPEB Trust Program is available to all local  governments in South Carolina. For more information, please contact Maureen Toal at 844.540.OPEB (6732), or mtoal@pars.org.


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