Pension Rate Stabilization

The PARS Post Employment Benefits Trust - Offering public agencies a first-of-its-kind Section 115 Post-Employment Benefits Trust to set aside and invest funds for retiree health care (OPEB) and/or pension in one trust, while providing economies of scale for investment, administrative, and trustee services.

The New year is a time to set new goals and plan for the long-term. One new option for Arizona cities and counties in 2021 is the PARS Pension Prefunding Trust, an IRS Section 115 trust vehicle to set aside funds to help manage PSPRS and ASRS obligations.

Public Agency Retirement Services (PARS) is excited to bring to Florida local governments for the first time our unique, IRS-approved Pension Prefunding Trust Program, in partnership with Vanguard and U.S. Bank. PARS pioneered the trust concept in 2015 with the first IRS Private Letter Ruling on a multiple employer Section 115 trust for local governments to set aside funds for future pension costs and/or retiree healthcare costs (OPEB).

Whether issuing Pension Obligation Bonds (POBs) or Certificates of Participation (COPs), an IRS Section 115 PARS Pension Prefunding Trust, in partnership with Vanguard and U.S. Bank, is a great new option in Arizona to address PSPRS, ASRS or any retirement system costs over the long term.

For the past several years, the City of Sausalito considered its rising pension obligations very seriously and continually examined all options to reduce pension liabilities and annual costs. Consequently, Sausalito implemented several policies for reform that focused on the variables that the city could control. But even all those improvements could not mitigate the rate and unfunded liability volatility from one CalPERS actuarial report to the next; there were just too many variables outside the city’s control. To stabilize rates charged to the city’s General Fund, the city’s Finance Committee looked at developing a pension funding methodology.