Pension Obligations

Understanding Pension Obligations
Pension obligations represent the City’s long-term commitment to provide retirement benefits to eligible employees. These obligations are determined by factors such as employee service, salary, and retirement benefit formulas.

Why are pension obligations important?
Responsible management of pension obligations supports the City’s long-term financial health and helps ensure that promised retirement benefits are available while maintaining essential public services.

The City of Sierra Madre participates in the California Public Employees’ Retirement System (CalPERS), a statewide public pension system that administers retirement benefits for eligible employees.

• The City makes required employer contributions
• Employees make required member contributions
• CalPERS manages pension investments and benefit payments

Unfunded Accrued Liability (UAL) represents the difference between the total pension benefits earned by employees and the assets available to pay those benefits.

Like many public agencies statewide, the City actively monitors its UAL and takes steps to manage and reduce long-term pension liabilities in coordination with CalPERS.

The City uses a combination of financial strategies to responsibly manage pension costs, including:

• Accelerated payments to reduce long-term interest costs
• Incorporating pension obligations into the annual budget and multi-year financial planning
• Regular evaluation of funding levels and actuarial reports

These efforts help maintain fiscal stability while protecting the City’s overall financial health.

The City provides public access to financial reports that include detailed information on pension obligations, funding strategies, and related financial data.

• Pension information is included in the City’s Annual Comprehensive Financial Report (ACFR)
• Adopted budget documents outline pension contributions and long-term financial strategies