Category: Employer News

This notice is to remind Sacramento County Employees’ Retirement System (SCERS) covered employers of the post-retirement employment reporting requirements.

Per the SCERS Post-Retirement Employment Policy, participating employers shall provide SCERS, no less than semi-annually by January 31 and July 31 of each year, a report disclosing the names of retired members who have been employed, their hours worked, their duration of post-retirement service, and any extensions to the 36-month “limited duration” period. This policy also applies to SCERS retirees hired as contractors by SCERS-covered employers. In addition, section 7522.56 states that “…the rate of pay for the employment shall not be less than the minimum, nor exceed the maximum, paid by the employer to other employees performing comparable duties…”.

SCERS employers shall also report the ending pay rate and pay rate or range for employees performing comparable duties when submitting their semi-annual report. Attached, please find a template you can use for the semi-annual report.

Please note that SCERS requires a single, consolidated semi-annual report from each employer (e.g. County of Sacramento) versus receiving separate reports from individual departments or sub-units of the employer. Individual department reports will be returned.

Additionally, SCERS requires confirmation from employers not employing SCERS retirees stating that fact.

If you have any questions regarding post-retirement employment or the reporting requirements, please contact SCERS at (916) 874-9119.

SCERS Semiannual Post-Retirement Employment Reporting Template

As part of its regular governance process, the Sacramento County Employees’ Retirement System (SCERS) is conducting its triennial review of the actuarial assumptions used to determine employer and employee contribution rates. We are reaching out to provide information about the preliminary recommendations under consideration and to invite your feedback before the Retirement Board considers any changes.

Why does SCERS review its assumptions?

Every three years, SCERS conducts an Experience Study to compare the assumptions used to fund the retirement system against actual demographic and economic experience. These assumptions—including investment returns, salary growth, retirement patterns, and life expectancy—help determine the contributions needed to ensure promised pension benefits can be paid over the long term.

Updating assumptions is a normal part of prudent pension funding. Rather than responding to short-term market conditions, the process is intended to ensure that contribution rates continue to reflect long-term expectations and the evolving characteristics of the retirement system.

Preliminary Recommendation

At recent Retirement Board meetings, SCERS reviewed preliminary recommendations from its actuary. Among the recommendations is reducing the assumed long-term investment return (also referred to as the discount rate) from 6.75% to 6.50%.

The Retirement Board has not made a decision on this recommendation. The Board will continue its review over the coming weeks and welcomes stakeholder input before taking final action.

Materials from the Board meetings are available here:

• May 20, 2026 presentation

• June 17, 2026 presentation

What would this mean for contribution rates?

If the investment return assumption is lowered, employer and employee contribution rates would increase because a greater share of future pension costs would be funded through contributions rather than assumed investment earnings.

Any approved assumption changes would become effective with contribution rates beginning July 1, 2027.

Employer contribution increases consist of two components:

• Normal Cost – the estimated cost of pension benefits active employees earn during the current year.
• Unfunded Liability – pension obligations attributable to prior years that are paid down over time.

The portion of any increase attributable to the unfunded liability may be phased in over two or three years to reduce contribution volatility for employers. However, changes to the normal cost must be recognized immediately because they reflect the cost of benefits currently being earned by employees.

It is also important to view these preliminary increases in context. Employer contribution rates have declined over the past four years as SCERS has recognized strong investment performance and continued paying down its unfunded liability. Those favorable trends are expected to continue. If the Retirement Board adopts a lower investment return assumption, much of the resulting increase would be offset by these existing reductions, leading to relatively flat employer contribution rates over the next several years rather than continued decreases.

Employee contribution rates are affected only by changes to the normal cost and therefore cannot be phased in.

Why is the Board considering a lower investment assumption?

SCERS has exceeded its current 6.75% investment return assumption over both the short and long term and is currently approximately 94% funded. Nevertheless, pension funding decisions are made with a decades-long perspective rather than based on recent investment performance.

Several factors support consideration of a lower investment return assumption:

• Independent capital market forecasts generally project lower expected investment returns over the next decade than the strong returns experienced in recent years.
• SCERS has matured as a retirement system. Today, benefit payments exceed contributions received from active members, and this gap is expected to grow over time and will impact the structure of SCERS’ strategic asset allocation, increasing the importance of maintaining sufficient long-term liquidity.
• A slightly lower investment assumption increases the likelihood that investment performance will meet or exceed expectations over time, helping promote stable contribution rates and strengthening the system’s long-term funding position.

Next Steps

The Retirement Board is scheduled to consider assumption changes at its August 19 meeting at 10:00 a.m. at the Sacramento Metropolitan Fire District, 10545 Armstrong Avenue, Suite 200, Mather, California 95655 (please note meeting location change). The meeting will also be streamed via Zoom. Public comment during the meeting will be accepted in person.

Written comments may be submitted to board-comments@scers.gov by August 1 so they can be shared with the Retirement Board before its deliberations.

SCERS will also host a stakeholder briefing via Microsoft Teams at 1:00 p.m. on July 17 to discuss the recommendations and answer questions.

We appreciate your participation in this process and encourage you to review the materials, attend the stakeholder briefing, and provide any feedback you would like the Retirement Board to consider.

Thank you,

Eric Stern
Chief Executive Officer

Preliminary Employer Contribution Rate Impacts beginning July 1, 2027

Preliminary Employee Contribution Rate Impacts beginning July 1, 2027

Federal and State laws place annual limits on the compensation that can be used to determine pension-eligible compensation for SCERS members. The limits are different for Legacy and PEPRA members. These are the annual compensation limits for 2026:

• Legacy members: In accordance with Government Code section 31671 of the County Employees’ Retirement Law (CERL), the 2026 Annual Compensation Limit as set forth by the IRS under section 401(a)(17) is $360,000.
• PEPRA members: In accordance with Government Code section 7522.10 of the County Employees’ Retirement Law (CERL), the 2026 Annual PEPRA Compensation Limit as set forth by the California Actuarial Advisory Panel is:
  • $159,733 for employees enrolled in Social Security
  • $191,679 for employees not enrolled in Social Security

It is expected that SCERS’ Participating Employers monitor employee compensation in accordance with the limits specified above and limit the pensionable compensation accordingly. 

This information was originally posted on the former SCERS website on November 3, 2025.

Employer contribution rates to SCERS will decrease next year as the pension fund continues to strengthen, based on an actuarial analysis being presented to the Board of Retirement on December 10.

The reduction will mark the fourth year in a row of lower pension contributions due to larger-than-expected investment gains. The pension fund beat its investment target of 6.75% this past fiscal year, finishing with a 10.8% investment return.

At its December meeting, the SCERS Board of Retirement will review the actuarial valuation and adopt contribution rates for the next fiscal year that begins July 1, 2026. The agenda materials can be found here. The Board meeting begins at 10 a.m. and will be live streamed from the quick link at scers.gov.

The aggregate employer contribution rate will decrease by 1% of payroll to 27.52% for the 2026-27 fiscal year. Employee contribution rates will remain relatively stable, decreasing on average by 0.05% in 2026-27. The specific rates vary by employer and retirement tier.

Overall, the long-term funding outlook for SCERS improved; SCERS ended the 2024-25 fiscal year with a funded status of 93.5%, an increase from the prior year’s 88.7%. The fund balance was $14.6 billion as of June 30, 2025, and has continued to grow to more than $15 billion today.

The funded status is the ratio of pension assets to liabilities. It represents a “temperature check” on how the pension fund is performing at a point in time and guides SCERS’ actuaries on how to adjust contribution rates to ensure the funding is sufficient over the long term to support the benefit obligations. SCERS targets a 100% funded status over a 20-year period and is on pace to achieve that goal.

SCERS provides pension benefits to more than 33,000 employees, retirees, and beneficiaries.