HomeMy WebLinkAboutSan Jose Federated City Employees' Retirement System - Public Financial Report1
POPULAR ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2021
PENSION TRUST &
POSTEMPLOYMENT
HEALTHCARE TRUST
FUNDS
OF
THE CITY OF
SAN JOSÉ,
CALIFORNIA
CITY OF SAN JOSÉ
FEDERATED CITY EMPLOYEES’
RETIREMENT SYSTEM
2
3 The Board
4 Financial Results
5 Membership & Funding
6 Investments
7 Growth of $10,000
TABLE OF CONTENTS
Government Finance Officers Association of the United
States and Canada (GFOA) has given an award for
Outstanding Achievement in Popular Annual Financial
Reporting to the System for its Popular Annual Financial
Report for the fiscal year ended June 30, 2020. The Award
for Outstanding Achievement in Popular Annual Financial
Reporting is a prestigious national award recognizing
conformance with the highest standards for preparation of
state and local government popular reports.
In order to receive an Award for Outstanding Achievement
in Popular Annual Financial Reporting, a government unit
must publish a Popular Annual Financial Report, whose
contents conform to program standards of creativity,
presentation, understandability, and reader appeal.
An Award for Outstanding Achievement in Popular Annual
Financial Reporting is valid for a period of one year only.
The System has received this award for the fifth year for the
fiscal year ended June 30, 2020. We believe our current
report continues to conform to the Popular Annual Financial
Reporting requirements, and we are submitting it to GFOA
to determine its eligibility for another Award.
https://www.sjretirement.com/
City of San José
Office of Retirement Services 1737 North First Street, Suite 600 San Jos é , CA 95112 - 4505 Phone: 408 - 794 -1000 or 800 -732 - 6477 Fax: 408 -392 -6732
3
Spencer Horowitz Julie Jennings
Chair Vice Chair
Anurag Chandra Elaine Orr
Trustee Trustee
Mark Keleher Vacant
Trustee Trustee
Vacant Devora “Dev” Davis
Trustee City Council Liaison
The Federated City Employees’ Retirement
System (System) is pleased to present the
Popular Annual Financial Report (PAFR) which
summarizes the Annual Comprehensive
Financial Report (ACFR) for the fiscal year
ended June 30, 2021. The financial data
presented in the PAFR is derived from the
ACFR and is consistent with Accounting
Principles Generally Accepted in the United
States of America (U.S. GAAP). The PAFR
provides a concise summary of the System's
financial position, investment performance
and key accomplishments throughout the
fiscal year. The System consists of a single
employer Defined Benefit Pension Plan and a
Postemployment Healthcare Plan.
This report is not intended to replace the
ACFR, which provides a more complete
overview of the System's financial position and
operating results. For more in-depth
information, we encourage you to read the
ACFR by visiting:
https://www.sjretirement.com/investments-and-reports/investments-and-reports-
federated/investments-and-reports-
federated-financial
Roberto Peña,
Director
Chief Executive
Officer
BOARD OF
ADMINISTRATION
4
In Thousands
As of June 30, 2021 2020 2019 2021 2020 2019
Receivables 75,363 72,657 17,753 76,743 11,476 4,109
Investments at fair value 2,835,604 2,150,627 2,115,800 379,979 299,491 290,963
Other assets, net 3,682 3,348 2,937 243 197 55
Total Assets 2,914,649$ 2,226,632$ 2,136,490$ 456,965$ 311,164$ 295,127$
Current liabilities 30,304 18,615 4,338 72,357 7,854 639
Total Liabilities 30,304$ 18,615$ 4,338$ 72,357$ 7,854$ 639$
Plan Net Position 2,884,345$ 2,208,017$ 2,132,152$ 384,608$ 303,310$ 294,488$
In Thousands
For the Period Ended June 30, 2021 2020 2019 2021 2020 2019
Employee contributions 25,724 25,082 22,606 10,275 10,692 10,578
Employer contributions 183,964 181,327 173,006 26,236 26,533 26,410
Net investment income 698,608 90,909 76,855 77,360 3,075 9,472
Total Additions 908,296 297,318 272,467 113,871 40,300 46,460
Retirement benefits 210,351 201,474 190,228
Death benefits 15,641 14,389 13,719
Refund of contributions 1,214 865 1,119
Administrative expenses 4,762 4,725 4,582 697 686 384
Healthcare insurance premiums 31,871 30,779 28,826
VEBA transfer 5 13 19
Total Deductions 231,968 221,453 209,648 32,573 31,478 29,229
Net Increase in Plan Net Position 676,328 75,865 62,819 81,298 8,822 17,231
Beginning Net Position 2,208,017$ 2,132,152$ 2,069,333$ 303,310$ 294,488$ 277,257$
Ending Net Position 2,884,345$ 2,208,017$ 2,132,152$ 384,608$ 303,310$ 294,488$
Defined Benefit Plan
Changes in
Plan Net Position for the
Postemployment Healthcare Plans
Net Position for the
Defined Benefit Plan Postemployment Healthcare Plans
Net Position for the
Changes in
Plan Net Position for the
$2,427
$3,269
$2,233
$2,347
$2,511
1,500
2,000
2,500
3,000
3,500
2017 2018 2019 2020 2021
TOTAL NET POSITION
IN MILLIONS
Pension Healthcare
FINANCIAL RESULTS
Net Position
This amount
represents the total
assets available for
benefit payments
for current and
future retirees
5
Membership Membership
As of June 30, 2021 As of June 30, 2020
Retirees Deferred Active Total Retirees Deferred Active Total
Tier 1 Tier 2 Tier 1 Tier 2 Tier 1 Tier 2 Tier 1 Tier 2 Tier 1 Tier 2 Tier 1 Tier 2
4,493 18 934 729 1,413 2,362 9,949 4,428 13 979 635 1,527 2,215 9,797
53
.
7
%
53
.
6
%
53
.
1
%
53
.
1
%
52
.
3
%
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
2016 2017 2018 2019 2020
Schedule of Funding Progress, Pension
in Millions
Unfunded Actuarial Liability Actuarial Valuation of Assets
Actuarial
Valuation
Year
Years of Average Average
Credited Monthly Final Monthly
Service Average Salary Benefit
0 - 5 $ 7,444 $ 1,096
6 - 10 $ 6,248 $ 1,784
11 - 15 $ 6,265 $ 2,905
16 - 20 $ 6,409 $ 3,991
21 - 25 $ 6,969 $ 5,476
26 - 30 $ 6,784 $ 6,705
31+ $ 6,984 $ 7,455
The Average Benefit Payment chart is a broad representation of
average benefits paid to retirees and survivors. All tiers are
combined in the calculation. The chart includes all members who
have retired through June 30, 2021.
The Funding progress ratio is the ratio
of the actuarial value of assets
available to pay retirement benefits
divided by the present value of
anticipated future retirement benefit
payments. The ratio of funding
progress is not yet finalized for the
actuarial valuation year 2021.
6
Public Equity, 49%
Investment grade bonds, 8%
Private equity, 8%
Immunized Cash Flows, 5%Core Real Estate, 3%
Venture/Growth Capital, 4%
Emerging Market Bonds, 3%
Growth Real Estate, 3%
Market Neutral Strategies, 3%
Private Debt, 3%
Private Real Assets, 3%
High Yield Bonds, 2%
Long-Term Government Bonds, 2%
TIPS, 2%
PENSION -TARGET ASSET ALLOCATION
AS OF JUNE 30, 2021
-2.0%
3.0%
8.0%
13.0%
18.0%
23.0%
28.0%
33.0%
2017 2018 2019 2020 2021
8.1%7.4%
3.9%3.9%
27.8%
7.5%
5.9%4.3%3.6%
29.2%
Investment Returns Compared to Benchmark
Benchmark Return Investment Returns, net
$93,984
$775,968
$(74,043)
$160,184
$292,425
$(22,564)$(37,457)
$163,051 $129,829
$86,327
$(200,000)
$(100,000)
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Investment Income, Net
in Thousands
Pension Healthcare
The Assets are
structured to
provide growth
from capital gains
and income, while
maintaining
sufficient liquidity
to meet
beneficiary
payments.
BENCHMARK
INDICES
Growth:
Public Equity
Benchmark
San Jose Custom
Private Equity
Benchmark
S&P Global
Leveraged Loan Index
+2%
NCREIF Property
Index
50% JPM EMBI GD/
50% JPM GBI-EM
Bloomberg US
Corporate High Yield
TR
Low Beta:
Bloomberg US
Govt/Credit 1-3 Year
TR
Market Neutral
Strategies Benchmark
Other:
Custom IG Bonds
Benchmark
BBg US TIPS 0-5
Years
Core Real Estate
Benchmark
Bloomberg US
Treasury Long TR
7
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
June 2001 June 2005 June 2009 June 2013 June 2017 June 2021
Growth of $10,000, 20 Years
0
5,000
10,000
15,000
20,000
25,000
30,000
June 2011 June 2013 June 2015 June 2017 June 2019 June 2021
Growth of $10,000, 10 Years
These are graphic trends to show
how much an initial investment of
$10,000 would be worth in the
Retirement System’s pension
portfolio after 10 and 20 years.
There is not enough data available
to show 30 years.
Growth of $10,000
in the Long-term