CERS Board Sets FY 2025 Employer Rates

Employers will see a reduction in County Employees Retirement Systems (CERS) employer contribution rates beginning July 1, 2024. The CERS Board of Trustees approved rates for Fiscal Year 2025 at its Monday meeting.

CERS nonhazardous and hazardous rates will decrease by 3.63 and 5.08 percentage points, respectively.

Employers will pay 19.71% for nonhazardous employees, which is down from 23.34% this fiscal year. CERS employers with hazardous-duty employees currently pay 43.69%; that rate will decline to 38.61% in July 2024.

While the contribution rates continue to decrease, the CERS non-hazardous plan is just 56.1% funded, and the hazardous plan is 51.4% funded.

The CERS board also said an asset allocation study has been completed, but still in draft format. Board member Merl Hackbert reported that asset allocation studies are typically conducted every three to five years. The last study was conducted in 2020.

The investment committee will reconvene in January to continue their consideration of two potential options for changes in asset allocations.

Public equity was reduced from 50% to 45% and 40% in both potential changes, respectively. In both options special credit allocation at least doubled from the current 10% allocation. In one option, the core fixed income allocation remained at 10%, while the other option raised the allocation to 15.5%

In the first option, the portfolio would still be built to return 6.96%, which is higher than the assumed rate of return of 6.50%. If this option is taken, the portfolio would remove over 100 basis points of risk – thereby significantly increasing risk-adjusted return.

The second option, the portfolio would be built to return 6.87% which is also higher than the assumed rate of return. If the committee were to recommend this option, the portfolio would remove about 194 basis points of risk.

Click below to download the projected employer contribution rates.