Post employment benefits, including pension and other post-employment benefits (OPEB), are often some of the largest line item expenditures for local governments nationwide. Costs can be unpredictable and often rise from year-to-year.
One way agencies or districts can initiate some control over these expenditures is by adopting and diversely investing assets into an IRC Section 115 Trust. These trusts have been commonly used to prefund OPEB since the mid 2000s, but few realize they can also be used to address pension costs.
Since 2015, PARS is the pioneer of IRS-approved dual Section 115 Trusts that enable local governments and education entities to set aside funds for both pension and/or OPEB liabilities.
Now serving over 500 entities nationwide, our program is a full-service, ready-to-go approach that includes fully flexible investment options from industry leaders.
With the PARS Section 115 Trust:
- Agencies can set aside money for pension, retiree healthcare, or both. There is full flexibility to make contributions of any amount, at any time.
- Pension and OPEB assets are held in separate subaccounts (per IRS rules) but combined for fee reduction purposes.
- Participating agencies maintain local control and have full investment flexibility – with the ability to select different investment strategies for each subaccount, if desired.
- Trust assets can be accessed at any time and sent directly to retiree healthcare providers or retirement systems, or returned to the agency as reimbursement for eligible costs.¹
No matter the size and scale of your post-retirement liabilities, the PARS Section 115 Trust can serve as a vehicle to help ensure long-term fiscal stability for your agency or district.
For more information on how this program can have a positive impact on your budget, please contact us today.
¹Note: In accordance with IRS rules, assets in the OPEB subaccount may be used only for OPEB-related expenses, while assets in the pension subaccount may be used only for pension-related expenses.