General Employee Pension

Target 3-D-1: Percent of general employee pension funded. 90%

The City of Tallahassee is invested in its employees and their long-term financial security. To protect the retirements of its employees, one of the city’s strategic targets is to have 90% of the general employee pension funded. The funded ratio is the value of the assets in the pension plan divided by a measure of the pension obligation, essentially assets as a percentage of liabilities.

The general employee pension is funded by contributions from both the employee and the City of Tallahassee. Employees pay 3.75% of their pre-tax salary into the plan. Each year independent actuaries calculate the minimum contribution that the City must make to the fund - in Fiscal Year 2022 this number was $27,127,000.

The Sinking Fund Commission has established policies and guidelines for the investment of these pension funds, one of which is that investments should be widely diversified to minimize risk. In October 2022 the Commission adopted an asset allocation model that is expected to earn a rate of return that meets or exceeds the long-term investment return assumption set by the Actuarial Valuation Report. The Actuarial Valuation Pension Plan Report as of October 1, 2020 set the investment return assumption as 7.40%, with an assumed real rate of return over inflation of 4.90%.

In a 2008 report by the U.S. Government Accountability Office, a funded ratio of about 80% or better is considered sound for a government pension system. The City of Tallahassee’s funded ratio has consistently been above 80% and has increased incrementally over the last few years.