The Legislature’s Retirement and Independent Entities (R&EI) Interim Committee held its first virtual meeting on June 22. This committee oversees institutions that include Utah Retirement Systems (URS) and the Public Employees’ Health Plan (PEHP). During this meeting, representatives of these entities summarized their end-of-year reports, shared initial impacts of COVID-19, and offered long-term projections.
Utah has once again greatly benefited from the fiscal responsibility URS – demonstrates year after year. Last year was a successful year for URS participants and the entity’s stakeholders.
Dee Larson, URS general counsel, listed a few record achievements for URS. First, the member account balances (401(k), 457, and Roth and traditional IRAs) reached $6.7 billion. Second, the net increase in all balances was more than $1.08 billion. Third, employee and employer contributions reached $428.6 million. And finally, benefit payments from accounts totaled $376.9 million.
“While 2019 was a good year for the fund, we know that the COVID‐19 pandemic presents challenges in 2020,” Larson said. “The Retirement Board continues to monitor, analyze, and manage the fund’s investments. We don’t expect, nor do we need, lofty returns year after year. Our fund is built to maximize long‐term returns throughout all types of market cycles, with an emphasis on downside protection.”
URS attributes its strong, well-funded retirement system to the many participating employers and elected officials who share the same long-term goals and remain committed to responsible funding.
On March 30, Gov. Gary Herbert issued an executive order allowing the temporary, limited suspension of some provisions of the Utah Post-retirement Reemployment Restrictions Act during the COVID‐19 state of emergency. This allowed some retirees without a one‐year break in service to be temporarily re‐employed in positions performing critical government functions while continuing to receive their monthly pension benefits. Larson said that seven employees have taken advantage of this so far.
PEHP maintains funding in a “medical risk pool” to cover any unexpected increases in health insurance claims. The PEHP statute limits the amount of reserves that can be in this fund at any given time. In the event the funding risk pool exceeds that cap, PEHP will return the excess to its members in a rebate.
PEHP Executive Director Chet Loftus reported that the impact of COVID-19 on the medical risk pool has been fairly minor. PEHP has been able to give back more than $40 million in excess reserves in the past 30 days, with $30.7 million of that going directly to state employees.
While PEHP has seen a drop in medical and dental claims, pharmaceutical claims initially increased due to concern over the availability of medication during the pandemic.
Loftus informed the committee PEHP will cover any costs associated with testing and treatment of COVID-19. As of April 30, 64 PEHP policyholders have tested positive for Coronavirus, 6 of whom required hospitalization with costs ranging from $6,000 to $192,000.
UPEA will continue to update members through the interim on the Utah Retirement Systems and Public Employee Health Plan. If you have questions on URS or PEHP legislation please reach out to your employee representative.