Arizona Public Safety Personnel Retirement System, Phoenix, recently celebrated that its member plans topped their required contributions by $5 billion, enabling it to improve its overall funding.
The $19.5 billion system consists of assets from local police officers, firefighters and corrections officers pension plans.
Leading the charge is Michael Townsend, administrator of the system, who was hired in 2019 and is tasked with improving the system's funding as well as the overall trust in an organization that saw its two prior administrators terminated for cause. "Honestly, we're far beyond what I ever imagined," said Mr. Townsend in a phone interview. "I had hopes the system would get there in 10 or 20 years. To get there in three years really is amazing."
He said his first two tasks were to rebuild relationships with stakeholders and rebuild trust before addressing funding issues, but low interest rates enabled employers to issue pension obligation bonds, and they had cash surpluses having received federal money in 2020.
In the three years ended June 30, the pension fund has posted a strong annualized gross return of 10.7%, but thanks as well to the additional contributions, its asset size has nearly doubled during that period, to $19.5 billion from $10.7 billion.
Almost 125 employers have each made additional contributions of at least $1 million to the PSPRS trust, and contributions during the period have totaled $5.2 billion, according to an Aug. 30 news release.
Arizona state, county and municipal governments, and fire districts that participate in the retirement system have been able to make those additional contributions through appropriations, low-interest debt issuances, tax measures and budgetary maneuvers.
PSPRS had a funding ratio of 46.9% as of June 30, 2020, and improved two years later to 65.3%. The funding ratio for this latest fiscal year is pending the actuarial valuation, and Mr. Townsend said he and the staff are eagerly waiting to see how much the funding ratio has continued to improve.
"To be looking forward to valuation is kind of a new thing for us," he said.
