In what is believed the largest year-over-year gain since they were created, the city’s four pension funds collectively appreciated by $130.1 million, a whopping 31.8 percent, for the fiscal year ending June 30, 2021.

As of June 2020, the funds had a total value of $508.1 million. This June, they totaled $638.2 million.

“These are historic returns,” said Al Marciano, who chairs the Municipal Retirement Board.

The performance of the fund that totaled $172,535,226 on June 30 exceeded benchmarks. The same is true of the three other funds managed by Fiducient: Fire and Police I, a closed fund with assets of $79.6 million; Police II at $268 million; and Fire II at $118 million.

Marciano, an accountant who serves in a voluntary role, credits the robust market, fund management and oversight of the committee with the outstanding performance. Mayor Frank Picozzi observed the 31.8 percent return exceeded that of the state retirement system with 25.6 percent returns for the fiscal year.

“As Mayor, a top priority is securing future benefits for all retirees and current city employees while keeping the costs as low as possible to our taxpayers,” Picozzi said in a statement.

City Treasurer Lynne Prodger and City Finance Director Peder Schaefer serve as fiduciaries for the police and fire plans. Schaefer said all four plans are managed collectively.

The role of the Retirement Board is to review plan management, target asset allocation and set policy. As Marciano explained, investments are made in different market sectors from bonds to domestic and foreign equities to stocks in small cap, mid-size and large companies. In all, 17 separately managed accounts, based on the sector of investments, make up the portfolio.

Anthony Tranghese from Fiducient serves as financial advisor and reports to Schaefer, Prodger and the Retirement Board.

Does the stellar performance of the past year mean that the city can increase pension benefits?

To start with, explains Schaefer, the city’s actuary looks at fund performances over a five-year period in determining whether the separate funds are sufficiently funded to pay benefits as set by contracts and ordinances. Taking into consideration the past fiscal year, over the past five years the average return of the funds is 11.4 percent, which exceeds the 6.9 percent investment return assumed by the actuary.

“It’s premature to think we’re out of the woods and could cut contributions,” Schaefer said referencing the overall level of unfunded pension liability, the worst of which being Fire & Police I. “It’s not time to think of improved benefits.”

There will be some changes, however, to the benefit of retirees.

Municipal retirees, Schaefer said, should receive a COLA, or cost-of-living adjustment, because of the investment performance next year, as the current year is based on the prior year. Without reviewing each of the plans and ordinances, he could not immediately define the impact on the payments from other plans.

He pointed out that the 31.8 percent growth in assets to all the plans represents the growth in invested funds. Overall, when contributions by city and employees as well as payments are calculated, the funds grew by about 26 percent.

“Our job is to manage the funds and to comply with the ordinances,” Schaefer said.

So far going forward, the investment of plan funds continue to roll along with the market.

As of the most recent quarterly report issued in August from Fiducient, the funds reflect similar percentage rates of appreciation.