TO: PUBLIC SAFETY, FINANCE
AND STRATEGIC SUPPORT
COMMITTEE
FROM: John Flynn
SUBJECT: Retirement Plans
Investments Annual Report
DATE: September 24, 2026
RECOMMENDATION
Accept the Annual Pension and Healthcare Investment Performance Report for the Police and Fire Department Retirement Plan and the Federated City Employees' Retirement System for Fiscal Year 2025-2026.
BACKGROUND
As stated in the Investment Policy Statements for both the Police and Fire Department Retirement Plan (P&F Plan) and the Federated City Employees’ Retirement System (Federated System):
"The Board of Administration recognizes that a stable, well-articulated investment policy is crucial to the long-term success of the System. As such, the Board members have developed this Investment Policy Statement with the following goals in mind:
• To clearly and explicitly establish the objectives and constraints that govern the investment of the System's assets,
•To establish a long-term target asset allocation with a high likelihood of meeting the System's objectives given the explicit constraints, and •To protect the financial health of the System through the implementation of this stable long-term investment policy, so that the Plan is able to timely pay retirement benefits owed to its members and beneficiaries when due.
It is under this context that the P&F Plan and the Federated System engage in frequent reviews of their asset allocation targets.
COMMITTEE AGENDA: 10/15/2026
ITEM: (d)1.
Public Safety, Finance and Strategic Support Committee
October 15, 2026
Subject: Retirement Plans Investments Annual Report
ANALYSIS
Pension Assets Following are fiscal year-end pension investment return results for the P&F Plan and the Federated System as of June 30, 2026.
Federated Pension System For the fiscal year-ended June 30, 2026, the Federated System returned 13.6% net of fees versus the Policy Benchmark return of 16.1% and the Assumed Rate of Return assumption of 6.625%. The table below illustrates historic performance versus the Policy Benchmark and Assumed Rate of Return since 2017.
FEDERATED PENSION SYSTEM
Fiscal Year End
Actual Return
Benchmark
Discount Rate
One of the primary divers of investment performance is the long-term strategic asset allocation by which the System investments will be apportioned. In conjunction with the Federated System's investment consultant and the Investment Program, the Federated Board adopted the following asset allocation at their September 17, 2026, meeting.
5.0%
3.0%
13.0%
2017 2018 2019 2020 2021 2022 2023 2024 2025
7.5% 5.9% 4.3% 3.6% 29.2% -4.4% 7.5% 9.7% 9.6%
8.1% 7.4% 3.9% 3.9% 27.8% -5.0% 7.8% 9.8% 10.4%
6.9% 6.9% 6.8% 6.8% 6.6% 6.6% 6.6% 6.6% 6.6% 6.6%
6.0%
24.0%
Federated Asset Allocation
4.0%
45.0%
Public Equity
Private Markets
-Multi-Sector Bonds
2026
13.6%
16.1% 8.7%
u Market Neutral Strategies
Immunized Cash Flows
Core Real Estate
10 YR
8.3%
Long Term Government Bonds
Public Safety, Finance and Strategic Support Committee
October 15, 2026
Subject: Retirement Plans Investments Annual Report
Based on capital market assumptions and asset class correlations at the time of adoption, the Systerm's investment consultant concluded that the asset allocation was expected to return an annualized rate of 8.17% over a 20-year period with a standard deviation of 11.64%.
P&F Pension Plan
For the fiscal year-ended June 30, 2026 the P&F Plan returned 13.1% net of fees versus the Policy Benchmark return of 14.6% and the Assumed Rate of Return assumption of 6.625%. The table below illustrates historic performance versus the Policy Benchmark and Assumed Rate of Return since 2016.
POLICE & FIRE PLAN
Fiscal Year End
Actual Return
Benchmark
Discount Rate
3.0%
15.0%
9.0%
2017 2018 2019 2020 2021 2022 2023 2024
9.7% 6.9% 4.3% 3.1% 26.3% -5.0% 7.7% 9.7%
9.5% 7.6% 4.4% 2.9% 25.2% -5.3% 7.5% 9.7%
6.9% 6.9% 6.8% 6.8% 6.6% 6.6% 6.6% 6.6% 6.6% 6.6%
6.0%
One of the primary drivers of investment performance is the long-term strategic asset allocation by which the System investments will be apportioned. In conjunction with the P&F Plan's investment consultant and the Investment Program, the P&F Board adopted the following asset allocation at their September 16, 2026, meeting.
P&F Asset Allocation
1.5%
27.5%
2025
10.0%
38.0%
10.3%
Public Equity
Private Markets
Multi-Sector Bonds
2026
13.1%
14.6%
Core Real Estate
Market Neutral Strategies
Immunized Cash Flows
10 YR
Long Term Government Bonds
8.3%
8.4%
Public Safety, Finance and Strategic Support Committee
October 15, 2026
Subject: Retirement Plans Investments Annual Report
Based on capital market assumptions and asset class correlations at the time of adoption, the System's investment consultant concluded that the asset allocation was expected to return an annualized rate of 8.11% over a 20-year period with a standard deviation of 10.86%.
Healthcare 115 Trust Assets
The Healthcare Trusts are managed in a similar, but more liquid, asset allocation than the Pensions. For the fiscal year-ended June 30, 2026, the Federated Healthcare Trust returned 17.6% net of fees versus the Policy Benchmark return of 17.5% and the Assumed Rate of Return assumption of 6.0%. The P&F Healthcare Trust returned
18.2% net of fees versus the Policy Benchmark return of 17.5% and the Assumed Rate of Return assumption of 6.0%. Following are fiscal year-end Healthcare 115 Trust investment return results for both the Federated Healthcare Trust and the P&F Healthcare Trust as of June 30, 2026.
HEALTHCARE 115 TRUST ASSETS
Fiscal Year End
Federated Healthcare Trust
Police & Fire Healthcare Trust
COORDINATION
2017 2018 2019 2020 2021
8.7% 4.9% 4.2%
7.0% 3.6% 4.7%
2.2% 24.8%
3.0% 24.0%
John Flynn
2025
Jay Kwon
CEO, Office of Retirement Services
2022 2023 2024
10.0% 8.2% 9.4% 11.0% 17.6% 7.5%
-9.6% 8.1% 9.5% 11.1% 18.2% 7.5%
CIO, Office of Retirement Services
2026
For questions, please contact Jay Kwon, CIo, Office of Retirement Services, at [email protected] or (408) 794-1009.
10 YR