02
Dec
2019

Save It for a Rainy Day: Address growing pension liabilities by setting aside funds

Categories: California Developments,OPEB/GASB 45/75,PARS News,Pension Rate Stabilization
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Setting aside money (prefunding) into an Internal Revenue Code (IRC) Section 115 trust is a proven, effective way to proactively address growing pension contribution rates and liabilities.

The PARS Pension Rate Stabilization Program (PRSP) allows public agencies to securely set aside funds, separately and apart from their retirement system, in a tax-exempt funding vehicle to mitigate long-term contribution rate volatility. Participating agencies can use assets at any time to pay pension obligations to the retirement system, and it creates a rainy-day fund that can reimburse an agency for its ongoing pension costs, especially in a tough budget year.


Why use the PARS PRSP as a fiscal tool?

  • DIVERSIFIED INVESTMENTS
    Potential greater returns over time than general fund.
  • STABILIZE COSTS
    Easily access funds to offset rising pension contribution rates.
  • LOCAL CONTROL
    Autonomy over your assets, contributions, disbursements, timing and risk tolerance of investement.
  • LONG TERM PLANNING
    Prudent option to manage ongoing liabilities, which are now on your financial statements.
  • FIRST PRIVATE LETTER RULING
    PARS holds an exclusive and first of its kind Private Letter Ruling (PLR) from the IRS on this concept.
  • OPTION TO PREFUND OPEB
    This Program is designed to also allow prefunding OPEB/retiree health in the same trust. Each is accounted for separately, with assets aggregated for lower fees.

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