The Retirement's Board's overall goal for MCERA investments is to build a portfolio that meets or exceeds the long-term actuarial assumption for return on net assets in order to provide our members with their promised benefits. This goal is accomplished by the implementation of a carefully planned and executed long term investment program. The California Constitution and Gov. Code Sections 31594 and 31595 authorize the Retirement Board to invest in any investment deemed prudent in the Board’s opinion. Investment decisions are made in the sole interest and for the exclusive purpose of providing benefits, minimizing contributions and defraying reasonable expenses for administering the system. Investments are diversified to minimize the risk of loss and to maximize the rate of return.
MCERA benefits are funded from three sources:
- Employer Contributions – Money employers pay
- Employee Contributions – Money deducted from employees’ paychecks, purchases and redeposits
- Investment Earnings - Earnings from stocks, bonds, alternative investments, other investments, minus fees
The MCERA Retirement Board is responsible for the prudent investment and diversification of MCERA’s assets to minimize the risk of loss and to maximize the rate of return on investments. To achieve MCERA’s investment return and diversification objective, portfolio assets are invested in a broad range of asset classes under the advice of professional investment consultants in collaboration with staff and with the investment services provided by external investment managers.
The Board’s Investment Policy Statement establishes MCERA’s general investment guidelines, policies, and procedures to prudently administer the assets invested and to effectively mitigate risk. The Board conducts periodic reviews of MCERA’s investments to ensure that assets are invested in compliance with the Investment Policy. The Board also closely monitors its investment managers to ensure that they are complying with its policies and meeting MCERA’s long-term investment return objectives.
Actuarial Valuation Reports
Triennial Experience Study
Each year MCERA's independent actuary completes an actuarial valuation, which is presented to the Retirement Board. The actuarial valuation measures the current and projected assets and liabilities of the retirement system as well as the system's funded status. Based on the results the Retirement Board adopts new member and employer contribution rates for all participating employers for the upcoming fiscal year.
Actuarial Assumption Changes
Every three years MCERA asks its actuary to perform an analysis of the appropriateness of all economic assumptions (e.g., inflation, investment returns, plan expenses, and salary schedules) and demographic assumptions (likelihood of an employee’s termination of employment, retirement, disability, or death at each age). The study helps the Retirement Board evaluate whether the current assumptions adequately reflect the long-term expectations and whether changes are necessary.
When changes in some or all of the actuarial assumptions occur, interest and contribution rates are adjusted accordingly. For example, a decrease in the assumed rate of investment return signifies an expectation of lower investment earnings by the fund. Therefore, when this rate is lowered, employee and employer contributions are typically increased.
Audited Financial Statements
MCERA’s Audited Financial Statements provide detailed information about MCERA’s finances and investments, including assets, liabilities, funding sources, and funded status.