Bright Idea: Allocating Reserves Toward Prefunding Liabilities

Categories: California Developments,OPEB/GASB 45/75,PARS News,Pension Rate Stabilization
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The start of the year brings with it new goals, new ideas, and new CAFR reports. With updated CAFR results now published, local governments can make decisions on how to use potential surplus and/or reserve funds in planning  for the next fiscal year.

One highly recommended use of additional money is to set aside funds in a trust to prefund long term liabilities such as pension (Pension Rate Stabilization Program – PRSP) and retiree healthcare (OPEB). For the majority of public agencies, these costs continue to rise, and the only way to ensure future fiscal sustainability is to take action now. There is a good reason over 215 agencies have adopted PRSP – to be ready for the future.

Whether your agency already has a trust with another provider, or needs to set one up, you should consider PARS’ unique, full-service, locally controlled trust approach that can be used to manage both pension and/or OPEB costs in one trust!

Key features of the PARS Section 115 prefunding trust programs: 

  • Pioneer in the Field – PARS is the pioneer of the concept of prefunding pension through a multiple employer Section 115 trust including a favorable Private Letter Ruling (PLR) from the IRS.
  • No Startup Costs – No minimum annual fees; no fees charged until assets are in trust; no trading or termination fees
  • Diversified Investing Options – Potential for greater returns than general fund with risk tolerance level determined by agency
  • True Historical Returns – Five portfolios with 1, 3, 5 and 10 year returns
  • Proven Track Record – PARS is an experienced, trusted administrator and consultant with an over 30 year proven track record in public agency retirement services
  • Growing Membership – Over 400 public agencies have adopted a PARS Section 115 trust

With the many advantages it brings, the PARS Section 115 trust program is the solution that can help relieve fiscal pressure and positively impact the budget for many years to come.